Module 2 Accounting For Budgetary Accounts PDF

ALDERSGATE COLLEGE ACCOUNTING FOR
GOVERNMENT,
SCHOOL OF BUSINESS AND ACCOUNTANCY NOT-FOR-PROFIT ENTITIES
AND
SPECIALIZED INDUSTRIES
Module 2: Accounting for Budgetary Accounts
Learning Focus
Section 29 (1), Article VI of the 1987 Constitution provides, “No money shall be paid out of the
Treasury except in pursuance of an appropriation by law.”
The aforecited lays down the legal bedrock for government accounting, particularly for budgetary
accounts. It simply means that no public fund may be spent if there is no law authorizing the
payment of money and specifying the purpose for which the same will be spent.
Accordingly, it may be said that accounting for budgetary accounts formally commences upon
enactment of the General Appropriations Act (GAA), which contains the legal authorization to use
public money for the various programs, activities and projects of the national government. The
approved appropriations are, in turn, the bases of the Department of Budget and Management
(DBM) for issuing allotments or the authority of government agencies to incur obligations or enter
into commitments to spend government funds. The level of allotments, on the other hand defines
the amount of cash allocations which shall be released by the DBM.
The appropriations, allotments and cash allocations mainly constitute the budgetary accounts, the
accounting of which are discussed in detail in this module.
ACCOUNTING SYSTEMS
The General Accounting Plan (GAP) shows the overall accounting system of a government
agency/unit. It includes the source documents, the flow of transactions z its accumulation in the
books of accounts and finally the conversion into financial information/data presented in the
financial reports. The following accounting systems are:
1. Budgetary Accounts System

2. Receipt/Income and Deposit System
3. Disbursement System
4. Financial Reporting System
The National Budget
Budgeting is basically planning and control. Planning involves the development of future
objectives and the preparation of various budgets to achieve these objectives. Control involves
the steps taken by management to ensure that the objectives set down at the planning stage are
attained, and to ensure that all parts of the organization function are in a manner consistent with
organizational policies.
A 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
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authorization are necessary before the plan can be executed. It is a definite proposal of estimate
or statement of receipts and expenditures that may be approved or rejected. As such, it 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.
As stated, the budget is an estimate of the proposed expenditures for specified purposes and
periods, and embodies the means of financing them during the same timeframes. It provides the
means for controlling the estimated amount to be raised, as well as, the proposed amounts to be
spent for specified object. It is a program that guides all activities relating to collections and
expenditures; it is the framework of the accounts by which the transactions affecting such
collections and expenditures shall be recorded. Therefore, the proper classification of income and
expenditures should be reflected in the accounts, so that the recorded data may give adequate
support to future budget estimates.
Form and Contents of the National Budget
The budget proposal of the President shall include current operating expenditures and capital
outlays. It shall comprise of such funds as may be necessary for the operation of the programs,
projects and activities of the various departments and agencies. Section 22, Article VII of the
Constitution of the Philippines provides that “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 measures.”
The budget shall be presented to Congress in such form and content as may be approved by the
President and may include the following:
1. A budget message setting forth in brief the government’s budgetary thrust for the budget
year, including their impact on development goals, monetary and fiscal objectives, and
generally on the implications of the revenue, expenditure and debt proposals; and
2. Summary financial statements setting forth:
a. Estimated expenditures and proposed appropriations necessary for the support of

the government for the ensuing fiscal year, including those financed from operating
revenues and from domestic and foreign borrowings;
b. Estimated receipts during the ensuing fiscal year under the laws existing at the
time the budget is transmitted and under the revenue proposals, if any, forming
part of the year’s financing program;
c. Actual appropriations, expenditures and receipts during the last completed fiscal
year;
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d. Estimated expenditures and receipts and actual or proposed appropriations during
the fiscal year in progress; and
e. Statements of the condition of the National Treasury at the end of the last
completed fiscal year, the estimated condition of the Treasury at the end of the
fiscal year in progress and the estimated condition of the Treasury at the end of
ensuing fiscal year.
Fundamental Principles of Fiscal Operations
Budget activities are governed by legal provisions/fundamental principles relating to financial

transactions and operations of the government. The principles, as provided for by the law, are:
1. No money shall be paid out of the public treasury or depository except in pursuance of an
appropriation law or other specific statutory authority;
2. Government funds or property shall be spent or used solely for public purposes;
3. Trust funds shall be available and may be spent only for the specific purpose for which the
trust was created;
4. Fiscal responsibility shall, to he greatest extent, be shared by all those exercising authority
over the financial affairs, transactions, and operations of the government agency;
5. Disbursements or disposition of government funds or property shall invariably bear the
approval of the proper officials;
6. Claims against government funds shall be supported with complete documentation;
7. All laws and regulations applicable to financial transaction shall be faithfully adhered to;
and
8. Generally accepted principles and practices of accounting, as well as, of sound
management and fiscal administration shall be observed, provided they do not contravene
existing laws and regulations.
Kinds of Budget
1. As to Nature
a. Annual Budget - a budget which covers a period of one year. It is the basis of an
annual appropriation.
b. Supplemental Budget - a budget which supplements or adjusts a previous budget
which is deemed inadequate for the purpose it is intended. It is the basis for a
supplemental appropriation.
c. Special Budget - a budget of special nature and generally submitted in special
forms on account that itemizations are not adequately provided in the
Appropriation Act or that the amounts are not at all included in the Appropriation
Act.
2. As to Basis
a. 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.
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b. Line-Item Budget - a budget the basis of which is the objects of expenditures such
as: salaries and wages, traveling expenses, freight, supplies and materials,
equipment, etc.
Balanced Budget
It is a budget where the proposed expenditures are equal to or less than the estimated revenues.
Currently, the government is operating with a budget deficiency. As such, it is serving government
priorities to achieve a balanced budget by increasing revenues and cutting on expenditures.
THE BUDGET PROCESS
1. Budget Preparation
This covers estimation of government revenues, the determination of budgetary priorities and
activities within the constraints imposed by available revenues and by borrowing limits, and
the translation of approved priorities and activities into expenditure levels. 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.
The budget preparation begins with the issuance of a “budget call” by the Department of
Budget and Management. This document outlines the priority areas of government activity
applicable to the budget year, which begins a year and one month hence.
It likewise reiterates the fiscal limits and approximate rate of increase in government ceilings
applicable to the budget year and appearing in the developing plan, as updated in the long-
term fiscal projection appearing in the latest Budget Message.
The budget proposals shall be reviewed on the basis of their own merits and not on the basis
of:
1. A given percentage or peso increase or decrease from a prior year’s budget level;
2. A given percentage of the aggregate budget level; or
3. A similar rule of thumb that is not based on specific justification.
The Department of Budget and Management summarizes the proposals and submits an
analysis and recommendation on the agencies’ budget proposals, which are submitted to the
President of the Philippines before finalization and submission to Congress.
2. Legislative Authorization
It is the second phase of the budget process relative to the enactment of the General
Appropriation Bills based on the budget of receipts and expenditures submitted by the
President of the Philippines within 30 days from the opening- of its regular session, as the
basis of the general appropriation bill.
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The General Appropriation Bill presents the proposals of the President of the Philippines for
new general appropriations in the coming year. The proposals are listed by agency or lump
sum fund and are detailed by budgetary function activities/projects. Each function is briefly
described in “appropriation language”. Any conditions governing agency expenditures are
presented as Special Provisions applicable to the agency, which also identify the amount
intended for the most significant activities of the agency. General provisions are also provided
in the Bill, representing the expenditure rules and conditions applicable to all agencies or to
groups of agencies. Budget briefing is conducted whereby the various heads of agencies
would explain to the Congress the details of their respective budgets.
Appropriations are approved by the legislative body in the form of:
1. A General Appropriation Law which covers most of the expenditures of government;

2. Supplemental Appropriations laws that are passed from time to time, to augment or correct
an already existing appropriation; and
3. Certain automatic appropriations intended for fixed and specific purposes.
4. Continuing appropriations pertain to authorized amounts for MOOE and Capital Outlays
(CO), the validity of which extend to one year following the year in which they were
appropriated, hence, the term continuing appropriation.
3. Budget Execution and Operation
The third phase of the budget process covers the various operational aspects of budgeting,
thus making budgeting as one of the principal tools of management control to ensure that
public funds are spent only for the specific purposes for which they are intended. It includes
the development of the operating budget, which indicates the program of work to be done or
undertaken, the time within which it should be done, the manpower and other resources
needed to carry out the work, and finally, the peso amounts required to accomplish the
proposed programs. Thus, budget execution and operation serve as the medium through
which plans for operation can be implemented using available resources and funds.
Budget execution and operation is comprised, among others, of the following: the
establishment of authority ceilings on obligations, the evaluation of work and financial plans
for individual activities, the continuing review of government fiscal position, the regulation of
fund releases, the implementation of cash payment schedules and other related activities such
as updating of planning and scheduling of activities. The responsibility for monitoring budget
execution and operation rests primarily with the Department of Budget and Management and
secondarily with the National Treasury.
Budget execution and operation is concerned with the release of funds in the form of
allotments and corresponding cash allocations, the continuing review of the budget program
in the light of revenue and borrowings, prevailing economic conditions, as well as, the review
of proposed uses of agency savings and other related activities.
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4. 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 legislative regarding the handling of receipts and
expenditures.
Data on uses of funds evidences the implementation of the legislative and appropriation
intention and is a major basis of next year’s budget preparation and evaluation. Under Sec.
63, P. D. 1177, agency officials are held liable for failure to submit reports (i.e. trial balances,
work and financial plans, special budgets, reports of operations and income, and other reports
as may be necessary and required by the Department of Budget and Management) and shall
automatically cause the suspension of payment of their salaries until they have complied with
the information requirements. No appropriation authorized in the General Appropriation Act
shall be made available to pay the salary of any official or employee, who violates the
provisions of said section, in addition to any disciplinary action that may be instituted against
such erring official or employee.
Budgetary Accounts
Budgetary accounts consist of the following:
1. Appropriation - an authorization made by law or other legislative enactment, directing

payment of goods and services out of government funds under specific conditions or for
special purpose.
2. Allotment - an authorization issued by the Department of Budget and Management to the
government agency, which allows it to incur obligations, for specified amounts, within the
legislative appropriation.
3. Obligation - a commitment by a government agency arising from an act of duly authorized
official which binds the government to the immediate or eventual payment of a sum of
money.
Budgetary Accounts System
The budgetary accounts system encompasses the processes of preparing the Agency Budget
Matrix (ABM), monitoring and recording of allotments received by the agency from the Department
of Budget and Management, releasing of Sub- Allotment Advices (SAAs) to Regional Offices (RO)
by the Central Office (CO), issuance of SAAs/LAAs to Operating Units (OU) by the Regional
Office, and recording and monitoring of obligations.
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The Allotment Release Order (ARO) is a formal document issued by the Department of Budget
and Management to the agency containing the authorization, conditions and amount of an agency
allocation. The document may be the Agency Budget Matrix, which effectively releases the
amount indicated as not needing clearance, or the Special Allotment Release Order (SARO),
which is issued subject to compliance with specific laws or regulations or is subject to separate
approval or clearance by competent authority. In case of agencies with decentralized accounting
procedures, Sub-allotment Advices/Letters of Advice of Allotments are issued or released.
Reporting Requirements
Per National Budget Circular No. 507, dated January 31, 2007, the Department of Budget and
Management requires national government agencies to submit, on a regular basis, Budget
Execution Documents (BEDs), which contain the agencies’ targets and plans for the current year,
and Budget Accountability Reports (BARs), which contain information on the agencies’ actual
accomplishments and performance for a given period. Data from these reports are used for
monitoring and providing the necessary information to the President and fiscal agencies for the
purpose of crafting sound policy decisions.
Using the prescribed Budget Execution Documents, government agencies shall submit their
plans, programs and targets for the year to the Department of Budget and Management on or
before April 15 of the current year. The Budget Execution Documents include the following:
1. Physical and Financial Plan (PFP)
This document serves as overall plan of the national government agencies encompassing the
physical (targeted outputs) and financial (estimated obligations/expenditures) aspects,
consistent with their approved budget level for the year, broken down by quarter. This shall
be submitted to the concerned DBM offices on or before February 15 of each year. The PFP
indicates the major final outputs to be delivered by the agency as well as the corresponding
funds required to accomplish them.
2. Monthly Cash Program (MCP)
This document shall reflect the monthly disbursement requirements of the national
government agencies. This shall be used by DBM as basis for issuance of Notice of Cash
Allocation (NCA), Cash Disbursement Ceiling (CDC), and other disbursement authorities; and
shall be submitted to the concerned DBM offices on or before February 15 of each year.
3. Estimate of Monthly Income
This document shall reflect the estimated income of the national government agencies for the
current year by source, as contained under the Budget of Expenditures and Sources of
Financing (BESF) of the given year, broken down by month; and shall be submitted to the
concerned DBM offices on or before February 15 of each year.
4. List of Not Yet Due and Demandable Obligations
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Due and demandable obligations represent claims against the government for goods which
were already delivered or services which were already rendered in favor of the government.
This document shall reflect the level of the national government agencies’
obligations/expenditures charged against prior years’ budget, for which,
goods/services/projects are not yet delivered/rendered/completed and accepted as of the end
of the preceding year. This shall be used by DBM as basis for determining the cash
requirements of these prior years’ obligations/expenditures, which will become due and
demandable during the current year; and shall be submitted to the concerned DBM offices on
or before January 31 of each year.
The Budgetary Accountability Reports include the following:
1. Quarterly Physical Report of Operations
This report shall reflect the national government agencies’ actual physical accomplishments
for a given quarter, in term of performance measures indicated in their Physical and Financial
Plan. This shall be submitted on or before the 10th day of the following quarter.
2. Quarterly Financial Report of Operations
This report shall reflect the national government agencies’ actual obligations/expenditures
incurred by programs/activities/projects and allotment class for a given quarter, corresponding
to the reported physical accomplishments for the same period. This shall be submitted on or
before the 10th day of the following quarter.
The data reflected under both the quarterly physical and financial reports are compared with
the targets indicated under the PFP to determine the agency’s performance for a given period.
3. Quarterly Report of Actual Income
This report shall reflect the national government agencies/ actual income collections from all
sources for a given quarter broken down by month. This shall be submitted on or before the
10,h day of the following quarter.
4. Statement of Allotment, Obligations and Balances
This report shall serve as the national government agencies’ summary report of allotments
received and corresponding obligations/expenditure incurred during the month from all
sources by object of expenditures. This shall be submitted on or before the 10th day of the
following month.
5. Monthly Report of Disbursements
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This report, in lieu of the Summary of List of Checks Issued and Cancelled, shall reflect all the
disbursements of the national government agencies during the month, arising from: Notice of
Cash Allocation (NCA), Non-cash Availment Authority (NCAA), Cash Disbursement Ceiling
(CDC), and Tax Remittance Advice (TRA).
The national government agencies shall directly submit, physically or electronically, their BEDs
and BARs to the concerned DBM offices. All heads of the national government agencies shall be
responsible for the timely submission of the prescribed documents/reports. Failure to submit the
required BEDs/BARs on the set deadline, the DBM shall send call up letters by applying the
following procedures:
1. First call up letter signed by the DBM director concerned shall be addressed to the head
of the national government agency to remind them of non-compliance.
2. Second call up letter to be signed by the DBM Assistant Secretary/Undersecretary shall
be addressed to the official of equivalent rank of the department where the agency is
attached citing the “non-action” to date despite the first call up letter, which shall also be
cited.
3. Third call up letter to be signed by the DBM Secretary shall be sent to the Secretary of
the department where the agency is attached citing the two previous call up letters sent.
4. In case of non-compliance with the reporting requirements despite the three call up
letters, the DBM shall strictly enforce the “no-report, no-release” policy, and include in the
report on the status of fund utilization to be submitted to the President, the list of erring
agencies.
General Guidelines on the Release of Funds
Pending the effective date of the new General Appropriation Act (GAA), national government
agencies are authorized to incur overdraft in allotment for obligations corresponding to the actual
requirement of their regular operations chargeable against the GAA, as re-enacted.
A re-enacted budget pertains to the budget of the preceding year which, by operation of laws,
becomes re-enacted and shall remain in force in effect until the general appropriation bill for the
current year is passed by Congress. The re-enactment of the budget is a mechanism sanctioned
by the constitution to allow the use of public funds for regular operations pending the approval of
the GAA. All unutilized allotments of agencies immediately before the effective date of the new
GAA out of the SAROs issued chargeable against the re-enacted GAA shall no longer be
available for obligation.
Upon the GAA’s effective date, which is after fifteen days following the completion of its publication
in the Official Gazette or in a newspaper of general circulation, the Allotment Release Program
may already be established.
The Allotment Release Program (ARP), which determines the level of allotment releases for a
given fiscal year, is composed of the following:
1. Obligations incurred,
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2. Obligations authorized as overdraft,
3. Special allotment release order (SAROs) issued from the beginning of current fiscal year
to the effectivity date of the current General Appropriation Act, and
4. Releases from the unprogrammed fund (UF). Allotment releases from the multi-user
Special Purpose Funds (SPFs) such as: Calamity Fund, Contingent Fund, E-Government
Fund, International Commitment Fund, Miscellaneous Personnel Benefit Fund, National
Unification Fund, Priority Development Assistance Fund, and Pension and Gratuity Fund
shall be over and above the agency Allotment Release Program.
As mentioned earlier, allotments are released either through the Agency Budget Matrix or through
the issuance of Special Allotment Release Orders (SAROs).
The Agency Budget Matrix
The Department of Budget and Management, in coordination and consultation with agencies,
shall prepare and issue the Agency Budget Matrix (ABM) which shall be the basis of the
comprehensive release of allotment chargeable against the current year GAA. The Agency
Budget Matrix shall contain the following:
1. Withheld Portion
This corresponds to the amount programmed by agencies for their regular operating
requirement pending the effectivity of the GAA that is usually the first quarter of the year.
2. Net Program
This pertains to the amount intended for regular operating requirements from the effectivity
date of the GAA to December 31 of the fiscal year segregated into: 1.) Needing Clearance
(NC), and 2.) Not Needing Clearance (NNC).
The portion of Needing Clearance shall include Confidential and Intelligence Fund,
Procurement of motor vehicle and equipment which are subject to prior approval of the
President of the Philippines, Agency built-in lump-sum appropriations necessitating the
submission of certain documents requirements prior to its release, Annually appropriated
Special Account in the General Fund, Budgetary items/provisions for conditional
implementation under the President’s veto message, Budgetary reallocations by the
legislature, and Budgetary support of the national government to GOCCs and LGUs.
The portion of Not Needing Clearance refers to budgetary items of agency budgets under the
GAA not included in Needing Clearance. It shall also include requirements for Retirement and
Life Insurance Premium (RLIP), and shall further include:
1. This Release
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This represents the initial comprehensively released allotment for Personal Services,
Maintenance and Other Operating Expenses, and Capital Outlay requirements of the agency.
2. For Later Release
This represents the amount to be released after the conduct of the Agency Performance
Review, which will be discussed in the succeeding section of this chapter.
Although part of the released amount under the Not Needing Clearance, the following built-in
appropriation items can only be obligated by the agency subject to compliance with the required
clearance/approval/documentation:
1. Computers and other information technology equipment, which need clearance from
National Computer Center;
2. Communication equipment, which require clearance the National Telecommunication
Commission;
3. Firearms, which need the prior approval of the Philippine National Police;
4. Research and development in the natural, agricultural, technological and engineering
sciences, which are subject to the approval of the Department of Science and Technology
and/or the department of Agriculture;
5. Books to be procured by agencies other than schools and the National Library exceeding
the authorized five copies per title, which need prior approval from DBM;
6. On-going foreign-assisted projects (FAPs), which require the attainment of certain
conditions; and
7. Grants, subsidies and contributions, which must be supported by details indicating among
others, the purpose, amount intended for each beneficiary and the list of recipients.
Per National Budget Circular No. 519 dated March 27, 2009, allotments to be comprehensively
released to the agencies under the “This Release” portion of the Agency Budget Matrix shall be
equivalent to 100% of Personal Services. For Maintenance and Other Operating Expenses, and
Capital Outlay, at least 50% of the Not Needing Clearance portion of the ABM shall be categorized
under the “This Release” portion, unless the projects under Capital Outlays are indivisible, in
which case the release therefore shall be 100%.
In order to provide agencies with sufficient time to implement projects and activities covered by
the preceding year GAA, the request for realignment of released allotments shall be requested
until June 30 of the current year. The deadline for the submission of requests for any release
requiring issuance of SARO and NCA, on the other hand, shall be on November 15 of the current
year.
The following budgetary policies are still in effect:
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1. Continuing appropriation for Maintenance and Other Operating Expenses (MOOE) and
capital outlay (CO) shall be valid until December 31 of the 2nd year of validity.
2. Appropriations under the current year’s GAA shall be valid for two years with the exception
of personal service, which shall lapse at the end of the current year.
3. All Special Allotment Release Orders (SAROs) chargeable against the re-enacted GAA
shall be valid while the new GAA is not yet in effect.
Guidelines on the Release of Disbursement Authorities
1. Release of Notice of Cash Allocation (NCA)
 The amount for Personal Service should fully provide for all filled positions inclusive of
fixed expenditures; and must take into consideration the timing of the grant of year-end
benefits and other similar items of expenditures, including pensions for uniformed
personnel and veterans.
 For seasonal periods or peak and slack times in the provision of Maintenance and Other
Operating Expenses adjustments should always be taken into consideration.
 Capital Outlay must likewise be programmed in accordance with scheduled work targets.
Initial construction activities will only entail fifteen percent (15%) mobilization costs and the
balance shall be in accordance with the work program. Likewise, equipment will require
payment only on the expected delivery date and not at the bidding and procurement
stages.
 For Foreign Assisted Projects, the release of the peso counterpart and loan proceeds shall
be synchronized. Moreover, the cash portion of the loan proceeds component shall be
released only upon receipt of the Bureau of Treasury certification regarding availability of
loan proceeds from the foreign lending institution.
Per Circular Letter No. 2008-11, NCAs to cover regular requirements of agencies including State
Universities and
Colleges, which are credited to their Regular MDS accounts under General Fund, Foreign-
Assisted Projects, Special Accounts in the General Fund, and Assistance to GOCC and Local
Government Units which are released through the Bureau of Treasury and Department of Budget
and Management, shall be comprehensively released, with a breakdown of the monthly NCA
requirements by operating unit. (An operating unit refers to the “agency” receiving NCA directly
from DBM.) The basis for the comprehensive release shall be the Monthly Cash Program (MCP).
All NCAs programmed and credited for the month whether part of the comprehensive release or
constituting the additional NCA releases, shall be valid only until the last working day of the said
month. Thus, any unutilized NCA corresponding to the book balance, net of the outstanding
checks, shall automatically lapse at the end of that month.
Pending approval of the GAA for the year, the DBM in coordination with the operating units, shall
prepare a tentative cash program which shall serve as basis for the release of the initial NCA
covering the first semester (January to June) requirements of each operating unit. The total
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tentative cash program for the first semester should be more or less equal to the programmed
allotment for the same period.
2. Release of Non-Cash Availment Authority (NCAA)
Agencies availing of foreign loan proceeds through direct payment chargeable against availment
allotment, shall submit a request for the issuance of NCA A prior to submission of availment
application to Foreign Lending
Institutions.
Request of NCAA shall be supported by the following: Photocopy of application for withdrawal or
equivalent document; certified list of obligation allotments; and Details of disbursements.
3. Release of Cash Disbursement Ceiling (CDC)
CDC is an authority issued by DBM to Department of Foreign Affairs (DFA) and Department of
Labor and Employment (DOLE) to utilize their income collected and retained by their Foreign
Service posts to cover its operating requirements but not to exceed the released allotment for the
purpose.
Release of CDC shall be supported by the following accountability reports as consolidated by

DFA and DOLE home office: Monthly Report of Income, Status of Working Fund, and Annual
Report of Income.
Conduct of the Agency Performance Review
Analysis of agency performance, in terms of physical and financial outputs, shall be undertaken
by DBM on a regular basis based on the Budget Accountability Report (BARs). The information
on the agencies accomplishments contained in the BARs shall be used and evaluated against
the targets they presented in their BEDs. The result of the agency performance review will be
used as one of the basis for deciding the following:
1. Release of the balance of the “For Later Release of the Not Needing Clearance” portion
of the approved Agency Budget Matrix;
2. Additional release from Special Purpose Fund;
3. Withdrawal of released allotment;
4. Approval of request for realignment; 5. Revision of cash Program; and
6. Revision of targets.
Common Fund System
The common fund system policy (for use of personal services, maintenance and other operating
expenses, capital outlays, and financial expenses without realignment) shall continue to be used.
However, the Common Fund Scheme will not apply to current year A/Ps to external creditors of
the five departments (i.e., DPWH, DepEd, DOH, CHED, and State Universities and Colleges
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(SUCs) covered by the Direct Payment Scheme. In such cases, specific NCAs shall be issued for
the purpose through their special MDS accounts, consistent with Circular Letter 2005-2.
Cash allocation released to agencies under the regular MDS sub-account may be used to cover
payment to obligations charged against their current and prior years’ budget, for which goods and
services have been delivered during the year after satisfying their regular operating requirements
as reflected in their Monthly Cash Program. The policy of having separate MDS sub-account for
retirement gratuity/terminal leave benefits and prior years’ accounts payable, as well as trust
liability account, shall be maintained.
ILLUSTRATIONS:
The Department and Budget Management, upon approval and issuance of the Agency Budget
Matrix (ABM) and the Special Allotment Release Order (SARO), released the following for Agency
X, including Notice of Cash Allocations:
Total Released
General Appropriation Appropriation Allotments NCA
Personal Services (PS) 200,000 50,000 30,000
Maintenance & Operating
Expenses (MOOE) 280,000 70,000 40,000
Capital Outlay (CO) 400,000 100,000 80,000
Financial Expenses (FE) 8,000 2,000 1,000
Special Purpose Fund
Capital Outlay (CO) 80,000 20,000 15,000
Books of the Department of Budget and Management
Appropriations and allotments are to be controlled and monitored by the Department of

Management through the registries it maintains such as: Registry of Appropriations and
Allotments (RAPAL), for the general appropriations; and Registry of Special Purpose Fund
Appropriation (RESPFA), special purpose funds. In addition, the Department of Budget and
Management shall also maintain the Registry of Allotments and Notice of Cash Allocations
(RANCA) for its control and monitoring of the Notice of Cash Allocations (NCA) releases.
Page 14 of 30
GOVERNMENT,
AND
Department of Budget and Management

Registry of Appropriations and Allotments (RAPAL)
AGENCY X
Capital Outlay Maintenance & O.E. Financial Expenses Personal Services
Date Re Allotmen Appropriatio Allotmen Appropriatio Allotmen Appropriatio Allotmen Appropriatio

f t n Balance t n Balance t n Balance t n Balance
400,000 280,000 8,000 200,000
100,000 300,000 70,000 210,000 2,000 6,000 50,000 150,000
The Registry of Appropriation and Allotments shall be maintained by the Department of Budget
and Management for each department of the National Government in order to control approved
appropriations and allotments released.

Registry of Special Purpose Fund Appropriation (RESPFA)
RELEASES
Date Agency CO MOOE PS FE Total Balance

x 20,000 20,000 80,000
The Registry of Special Purpose Fund Appropriation shall contain funds appropriated for
purposes other than those provided in the regular funds of government agencies, like,
Miscellaneous Personnel Benefits (Personal Services); Calamity Fund (Capital Outlay); and
Organizational Adjustment Fund (Maintenance and Other Operating Expenses and Financial
Expenses).

Registry of Allotments and NCA (RANCA)
AGENCY X
ALLOTMENTS Unfunded
NCA Allotment
Date Ref CO MOOE PS FE Total
120,000 70,000 50,000 2,000 242,000 166,000 76,000
The Registry of Allotments and NCA shall be maintained by the DBM to control the funding of
allotments. Columns are provided for each allotment class and NCA released to the
department/agency. A column for the unfunded allotment is provided to determine the balance of
allotment without corresponding NCA.
Page 15 of 30
GOVERNMENT,
AND
Books of Bureau of Treasury
The Bureau of Treasury shall maintain the Registry of Notice of Cash Allocations and
Replenishments (RENREP) for the same purpose and for the monitoring of bank transfers it
makes in replenishing its Modified Disbursements Scheme (MDS) accounts.
Bureau of Treasury
Registry of NCA and Replenishments (RENREP)
AGENCY X
Date Ref NCA Replenishment Balance

166,000 166,000 0
The Registry of NCA and Replenishment shall be used by the Bureau of Treasury to record the
NCA releases and the bank replenishments made to cover MDS checks issued by the agencies.
Books of the Agency
The government agency shall maintain different Registry of Allocations and Obligations for the
control and monitoring of the allotments it receives and the obligations it incurs. It should be noted
that the agency will not journalize the receipt of its appropriation and allotments, but instead simply
post it in the respective registry, as shown below.
Accordingly, when the obligation is incurred, as evidenced by the approved Allotments and
Obligation Slips (ALOBS), the obligation is recognized and will be entered in the appropriate
Registry of Allotment and Obligations’ obligation incurred column.
The following are the registries in the books of the agency:
1. Registry of Allotments and Obligations - Personal Services (RAOPS)

2. Registry of Allotments and Obligations - Maintenance and Other Operating Expenses
(RAOMO)
3. Registry of Allotments and Obligations - Capital Outlay (RAOCO)
4. Registry of Allotments and Obligations - Financial Expenses (RAOFE)
REGISTRY OF ALLOTMENTS AND OBLIGATIONS

PERSONAL SERVICES (RAOPS)
AGENCY X
Sheet No.
_____
Date Ref P.P.A. Account Allotment Obligation Balance
Code Received Incurred
50,000 50,000
Page 16 of 30
GOVERNMENT,
AND
The Registry of Allotments and Obligations - Personal Services shall be used to record allotments
received and obligations incurred for expenses classified under Personal Services, such as: basic
pay, all authorized allowances, bonuses, cash gifts, etc.

MAINTENANCE AND OTHER OPERATING EXPENSES
(RAOMO) AGENCY X
Sheet No.
_____
70,000 70,000
The Registry of Allotments and Obligations - Maintenance and Other Operating Expenses shall
be used to record allotments received and obligations incurred for expenses classified under
Maintenance and Other Operating Expenses, such as: travelling expenses, supplies and
materials, repairs and maintenance of property, plant and equipment, representation expenses,
training and seminar expenses, etc.

CAPITAL OUTLAY (RAOCO)
AGENCY X
Sheet No. _____

120,000 120,000
The Registry of Allotments and Obligations - Capital Outlay shall be

record allotments received
used to obligations incurred for Capital Outlay, such as: purchase and
and ty, plant and equipment.
construction of proper

FINANCIAL EXPENSES (RAOFE)
AGENCY X Sheet No. _____

2,000 2,000
Page 17 of 30
GOVERNMENT,
AND
The Registry of Allotments and Obligation - Financial Expenses shall be used to record allotments
received and obligations incurred for Financial Expenses, such as, commitment fees, bank
charges, interest expenses, documentary stamps expenses, etc., to distinguish them from the
regular maintenance and other operating expenses.
Upon receipt of Notice of Cash Allocation (NCA), the agency shall journalize the NCA it receives
as a debit to “Cash - National Treasury, Modified Disbursement Scheme” and a credit to “Subsidy
Income from National Government” in the Regular Books of the Agency, as shown below. This
journal entry will show that the NCA received is the share of the agency in the income of the
National Government and a proof that there is cash allocated for the agency by the National
Treasurer. The amount of NCA received by the agency may be net of the amount of taxes to be
withheld by the agency under the Tax Remittance Advice (TRA) System, which will be discussed
in the later part of this chapter.
The agency shall credit “Cash - National Treasury, MDS” each time a payment is made charged
against the NCA and debit the specific account being paid for, either asset or expense account.
The NCA may be used for the payment of the following types of transactions:
1. Personal Services
2. Maintenance and Other Operating Expenses
3. Financial Expenses
4. Purchase and/or Construction of Fixed Assets (e.g. building and structures, land, land
improvement, equipment, etc., charged against the capital outlay.)
5. Miscellaneous Transactions (e.g. Cash to another agency to implement a project of the
agency, Guaranty Deposit, Cash Advances, etc.)
It should be noted that per National Budget Circular No. 2009-520, Guidelines on Revised Rates
of Representation and Transportation Allowances (RATA), dated March 27, 2009, the monthly
RATA rates shall be as follows:
Monthly Rate
for
Officials and Employees
Each Type of
Allowance
Department Secretaries and Equivalent Ranks P11,000
Department Undersecretaries and Equivalent Ranks 8,700
Department Assistant Secretaries and Equivalent Ranks 7,800
Bureau Directors, Department Regional Directors and Equivalent Ranks 7,000
Assistant Bureau Directors, Department Asst. Regional Directors, Bureau 6,300
Regional Directors, Department Service Chiefs and Equivalent Ranks
Assistant Bureau Regional Directors and Equivalent Ranks 5,500
Page 18 of 30
GOVERNMENT,
AND
Chiefs of Division identified as such in the Personal Service Itemization and 4,000
Plantilla of Personnel and Equivalent Ranks
Regular Agency Books Source

Documents
and
Transactions Account Title Account Code Debit Credit Books of

Original Entry
Cash
Transactions
1. Receipt of Cash - National 166,000
NCA. Treasury, MDS
Subsidy Income 166,000 NCA/JEV/GJ
from NG
The Regular Agency Books shall be used to record the regular transactions of the agency like the
receipt and utilization of NCA, as well as, collections of income and other receipts, which the
agency can use. Likewise, income collected and deposited under the agencies’ accounts with
Authorized Government Depository Banks (AGDB), as authorized, shall be recorded in the
Regular Agency Books.
However, those income realized/collected for the National Government and for which the agency
is not authorized to use shall be recorded under the National Government Books maintained by
the agency.
Accounting for Obligations
As defined earlier, obligation refers to a commitment by a government agency arising from an act
of a duly authorized official, which binds the government to the immediate or eventual payment
of a sum of money. The agency is authorized to incur obligations only in the performance of
activities, which are in pursuits of its functions and programs authorized in appropriation acts/laws
within the limit of the Allotment Release Order (ARO).
Examples of actions or documents, which commit the government and which can be classified as
obligations are: Purchase Orders, Contracts, Travel Authorizations, Request for Installation or
Provision of Public Utilities such as water, electricity, telephone, etc.
Moreover, the government agency shall maintain four registries to monitor and control its use of
the allotments: the
Registry of Allotment and Obligations - Personal Services (RAOPS); Registry of Allotment and
Obligations - Maintenance and Other Operating Expenses (RAOMO); Registry of Allotment and
Obligations - Capital Outlay (RAOCO); and Registry of Allotment and Obligations - Financial
Expenses (RAOFE). Only obligations/expenditures supported by appropriate documents, such
as: Purchase Orders, Contracts, Travel Authorizations, etc., showing a commitment made by the
agency shall be recorded in these registries by use of the Approved Allotment and Obligation
Page 19 of 30
GOVERNMENT,
AND
Slips (ALOBS). The Budget Officer shall certify to the availability of allotment and such is duly
obligated.
On the other hand, the Accountant shall certify to the correctness and validity of obligations, and
availability of funds To illustrate, using the same information that of Agency X in the preceding
pages, Agency X incurred the following obligations:
General Appropriation Obligations Incurred
Personal Services 20,000

Maintenance & Operating Expenses 30,000
Capital Outlay 50,000
Financial Expenses 500
Special Purpose Fund
Capital Outlay 25,000
To record the foregoing obligations incurred in the respective Registries of Allotments and
Obligations are as follows:

PERSONAL SERVICES (RAOPS)
AGENCYX
Sheet No. _____
Account Allotment Obligation

Date Ref P.P.A. Balance
50,000 50,000
20,000 30,000
Note that the obligation incurred of P20, 000 reduced the total allotment received to P30, 000.

MAINTENANCE AND OTHER OPERATING EXPENSES (RAOMO)
AGENCY X
Sheet No. ______

70,000 70,000
30,000 40,000
Page 20 of 30
GOVERNMENT,
AND

CAPITAL OUTLAY (RAOCO)
AGENCY X
Sheet No. _____

120,000 120,000
75,000 45,000
FINANCIAL EXPENSES (RAOFE)
AGENCY X
Sheet No. ______

2,000 2,000
500 1,500
Note that the obligation incurred of P500 reduced the total allotment received to P1, 500.
Tax Remittance Advice
Pursuant to the Tax Remittance Advice (TRA) System, as provided for in Joint Circular No. 1-
2000 dated January 3, 2000, as amended by JC No. 1-2MOA dated July 31, 2001 of the
Department of Finance, the Department of Budget and Management and the Commission on
Audit, the Notice of Cash Allocation (NCA) released to the government agency is reduced by the
amount of the estimated taxes expected to be remitted by the agency through the Tax Remittance
Advice. Estimated taxes are computed based on the following percentages: Personal Services -
8%; Maintenance and Other Operating Expenses - 5%; and Capital Outlay - 5%. The Notice of
Cash Allocation received by the government agency from the Department of Budget and
Management is net of the applicable percentage of Tax Remittance Advice based on the Notice
of Cash Allocations received.
Using the same illustration for Agency X, the journal entry to record receipt of Notice of Cash
Allocation, net of TRA, in the amount of PI66,000 is debited to “Cash- National Treasury, MDS”
and credited to “Subsidy Income from National Government” as shown in the Regular Agency
Books in the preceding page. (Note that the TRA is not recognized.) Assume that Agency X
established payroll fund.
Page 21 of 30
GOVERNMENT,
AND
The journal entry to record the establishment of payroll fund, with the assumed payments and
deductions, is as follows:
Regular Agency Books
Account Title Account Code Debit Credit

Salaries and Wages - Regular 20,000
Pay
Due to BIR 2,000
Due to GSIS 1,000
Due to Officers and 17,000
Employees
Assume further that the above shown withholding taxes payable in the amount of P20, 000 was
remitted to the Bureau of Internal Revenue. The journal entry to record the remittance is shown
below.
Regular Agency Books
Account Title Account Debit Credit

Code
Due to BIR 2,000
Subsidy Income from National Government 2,000
Note that no amount of cash was involved in the recording of the above remittance to Bureau of
Internal Revenue. It is only at this point, the applicable Notice of Cash Allocation for the Tax
Remittance Advice was recognized.
Posttest
A. Questions
1. What is the General Accounting Plan of government agencies/units? Enumerate and

explain the accounting systems in the NGAS - National.
The General Accounting Plan (GAP) shows the overall accounting system of a government
agency/unit. It includes the source documents, the flow of transactions z its accumulation
in the books of accounts and finally the conversion into financial information/data
presented in the financial reports. The following accounting systems are:
1. Budgetary Accounts System
2. Receipt/Income and Deposit System
3. Disbursement System
Page 22 of 30
GOVERNMENT,
AND
4. Financial Reporting System
2. Enumerate and explain the different kinds of budget.

As to Nature
d. Annual Budget - a budget which covers a period of one year. It is the basis of an
annual appropriation.
e. Supplemental Budget - a budget which supplements or adjusts a previous budget
which is deemed inadequate for the purpose it is intended. It is the basis for a
supplemental appropriation.
f. Special Budget - a budget of special nature and generally submitted in special
forms on account that itemizations are not adequately provided in the
Appropriation Act or that the amounts are not at all included in the Appropriation
Act.
As to Basis
c. 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.
d. Line-Item Budget - a budget the basis of which is the objects of expenditures such
as: salaries and wages, traveling expenses, freight, supplies and materials,
equipment, etc.
3. Discuss briefly the budget process/cycle.
a Budget Preparation- covers estimation of government revenues, the

determination of budgetary priorities and activities within the constraints imposed
by available revenues and by borrowing limits, and the translation of approved
priorities and activities into expenditure levels.
b Legislative Authorization - second phase of the budget process relative to
the enactment of the General Appropriation Bills based on the budget of receipts
and expenditures submitted by the President of the Philippines within 30 days from
the opening- of its regular session, as the basis of the general appropriation bill.
c Budget Execution and Operation - third phase of the budget process covers
the various operational aspects of budgeting, thus making budgeting as one of the
principal tools of management control to ensure that public funds are spent only
for the specific purposes for which they are intended.
d Budget Accountability - The last phase of budget process consists of the
following: Periodic reporting by the government agencies of performances under
their approved budget; Top management review of government activities and the
fiscal policy implementations thereof; and The actions of Commission on Audit in
assuring the fidelity of officials and employees by carrying out the intent of the
legislative regarding the handling of receipts and expenditures.
Page 23 of 30
GOVERNMENT,
AND
4. Enumerate and explain the budgetary accounts.

1. Appropriation - an authorization made by law or other legislative enactment, directing
payment of goods and services out of government funds under specific conditions or
for special purpose.
2. Allotment - an authorization issued by the Department of Budget and Management to
the government agency, which allows it to incur obligations, for specified amounts,
within the legislative appropriation.
3. Obligation - a commitment by a government agency arising from an act of duly
authorized official which binds the government to the immediate or eventual payment
of a sum of money.
4. What are the registries maintained by the Department of Budget and Management?
1. Registry of Appropriations and Allotments (RAPAL), for the general appropriations;

2. Registry of Special Purpose Fund Appropriation (RESPFA), special purpose funds.
3. Registry of Allotments and Notice of Cash Allocations (RANCA) for its control and
monitoring of the Notice of Cash Allocations (NCA) releases.
4. What is the registry maintained by the Bureau of Treasury for the purpose of monitoring
bank transfers to replenish its Modified Disbursements Scheme accounts?
The Bureau of Treasury shall maintain the Registry of Notice of Cash Allocations and
Replenishments (RENREP) for the same purpose and for the monitoring of bank transfers
it makes in replenishing its Modified Disbursements Scheme (MDS) accounts.
5. What are the registries maintained by the government agencies/units? Explain briefly each
registry.
1. Registry of Allotments and Obligations - Personal Services (RAOPS)
2. Registry of Allotments and Obligations - Maintenance and Other Operating
Expenses (RAOMO)
3. Registry of Allotments and Obligations - Capital Outlay (RAOCO)
4. Registry of Allotments and Obligations - Financial Expenses (RAOFE)
6. Explain briefly the Tax Remittance Advice (TRA).

Document which agencies issue/file with the BIR to report and record remittances
(constructive payment) of all taxes withheld from transactions. This serves as basis for
BIR and BTr to record as income, the tax collection and deposit in their books of accounts.
Page 24 of 30
GOVERNMENT,
AND
7. What are the two documents/reports, which are required by the Department of Budget and
Management to be submitted on a regular basis?
The Department of Budget and Management requires national government agencies to

submit, on a regular basis, Budget Execution Documents (BEDs), which contain the
agencies’ targets and plans for the current year, and Budget Accountability Reports
(BARs), which contain information on the agencies’ actual accomplishments and
performance for a given period.
8. Enumerate and explain the three disbursement authorities provided by National Budget
Circular No. 508.
B. Multiple Choice
B 1. It is the system of prescribing the procedures for recording appropriations, allotments and
obligations. a. Fund accounting
b. Budgetary accounting
c. Obligation accounting
d. Government accounting
D 2. Its main concern is the availability and use of funds for public services.
a. Commission on Audit
b. Department of Finance
c. Bureau of Treasury
d. National Budgetary System
C 3. It is a statement of estimated receipts and estimated expenses of the government, which

serves as basis for a General Appropriation Act.
a. Statement of financial position
b. Statement of operations
c. National government budget
d. Local government budget
A 4. Which department prepares the national budget, which serves as the basis of the General
Appropriation Act?
a. Executive Department
b. Legislative Department
c. Judiciary Department
d. National Government Agencies/units
B 5. It is the legislative consideration, review and approval of the national

budget. a. Preparation
Page 25 of 30
GOVERNMENT,
AND
b. Authorization
c. Execution
d. Accountability
C 6. It is the implementation of the national budget by different departments and release of

allotments. a. Budget preparation
b. Budget authorization
c. Budget execution
d. Budget accountability
B 7. It denotes the responsibility to others that one or more persons have for their actions
and behavior. a. Preparation
b. Accountability
c. Authorization
d. Execution
D 8. Separate registries shall be maintained to control the allotments, when should allotments
be recorded in the registries?
a. At the beginning of the year.
b. Quarterly.
c. When money of the government is already disbursed.
d. At the end of the year.
D 9. As specifically provided for in the New Constitution, no money shall be paid out of the National
Treasury
EXCEPT in the pursuance of
a. Budget
b. President’s executive order
c. Fund
d. Appropriation
A 10. It is the legislative authorization to make payments out of government funds under
specified conditions and specific purposes.
a. Appropriation
b. Allotment
c. Obligation
d. Budgeting
C 11. It is the authorization from the Department of Budget and Management to an agency to
incur obligation up to a specified amount that must be within the legislative appropriation. a.
Obligation
b. Appropriation
c. Allotment
Page 26 of 30
GOVERNMENT,
AND
d. Fund release
A 12. It is the amount committed to be paid by the government arising from an act of a duly
authorized administrative officer and which binds the government to the immediate and
eventual payment of money.
a. Obligation
b. Appropriation
c. Allotment
d. Commitment
A 13. It is the functions and activities necessary for the performance of a major purpose for which
a government entity is established.
a. Program
b. Project
c. Resources
d. Internal control
A 14. The journal entry to be made in the books of government agencies/units upon receipt of Notice of
Cash
Allocation is
a. Cash - National Treasury, MDS
Subsidy Income from National Government
b. Cash in Bank - Local Currency, Current Account
c. Cash in Bank - Local Currency, Savings Account
d. Cash in Bank - Local Currency, Time Deposit Subsidy Income from National Government
A 15. To control the allotments and obligations of the four classes of allotments, the following
registries shall be maintained by government agencies/units.
a. RAOCO, RAOPS, RAOMO, and RAOFE
b. RAOCO, RAOPS, RAOMO, and RANCA
c. RAOCO, RAOPS, RAOMO, and RPI
d. RAOCO, RAOPS, RAOFE, and RPI
A 16. It is the formal document issued by the Department of Budget and Management to the
head of the agency containing the authorization, conditions and amount of allocation.
a. Special Allotment Release Order
b. Allotment and Obligation Slip
c. Notice of Cash Allocation
d. Registry of Allotment and Obligation
D
Page 27 of 30
GOVERNMENT,
AND
17. In government accounting, which of the following is a personal service?
a. Telephone charge
b. Rent
c. Meal allowance for overtime work
d. Salaries and wages
C 18. In government accounting, which of the following is a capital outlay?

a. Salaries and wages
b. Repairs and maintenance
c. Land improvement
d. Merchandise inventory
C 19. It is the annual documents required at the onset of the budget execution phase, which
contain the agencies’ targets and plans for the current year.
a. Agency Budget Matrix (ABM)
b. Annual Cash Program (ACP)
c. Budget Execution Documents (BEDs)
d. Budget Accountability Report (BARs)
A 20. It is a budget execution document that serves as an overall plan of the government agency
encompassing the targeted outputs and estimated obligations broken down by quarter.
a. Physical and Financial Plan (PFP)
b. Monthly Cash Program (MCP)
c. Estimate of Monthly Income
d. List not yet due and demandable obligations
D 21. It is a component of Budget Accountability Reports (BARs) that should be reported on

monthly basis. a. Monthly Cash Program
b. List not yet due and demandable obligations
c. Estimate of monthly income
d. Statement of allotments, obligations and balances
C 22. It is a disbursement authority representing Modified Disbursement Checks issued

and direct payments to external creditors per validated advice to debit account in the
list of due and demandable accounts payable.
a. Tax Remittance Advice (TRA)
b. Notice of Cash Allocation (NCA)
c. Non-Cash Availment Authority (NCAA)
d. Cash disbursement Ceiling (CDC)
D 23. Government agencies are required to submit to the Department of Budget and
Management their plans, programs and targets for the year using the Budget Execution
Documents (BEDs) on or before a. January 1
Page 28 of 30
GOVERNMENT,
AND
b. January 31
c. April 15
d. December 31
C 24. In order to provide agencies with sufficient time to implement projects/activities covered
by realignment, request for realignment of released allotments under the prior year budget
shall be requested until a. January 1 of the current year
b. April 1 of the current year
c. June 30 of the current year
d. December 31 of the current year
C 25. Effective January 2009, the following modifications in the Notice of Cash Allocation (NCA)
release shall be adopted, EXCEPT
a. Notice of Cash Allocations to cover regular requirements of agencies shall be
comprehensively released with a breakdown of the monthly NCA requirements by
operating unit.
b. Additional NCAs shall be released corresponding to the SAROs to be issued to the
operating units on the basis of the separate Monthly Cash Program submitted by the
operating units.
c. All NCAs programmed and credited for the month whether part of the comprehensive
release or constituting the additional NCA release, shall be valid only until the last working
day of the fiscal year.
d. Any unutilized NCA corresponding to the book balance, net of outstanding checks, shall
automatically lapse at the end of that month.
C 26. All Special Allotment Release Orders (SAROs) issued chargeable against General
Appropriation Act (GAA) of a Fiscal Year (FY) as re-enacted shall be valid for obligation
while the new GAA is not yet in effect. What is the effective date of the new GAA?
a. Immediately after the approval by Congress.
b. Immediately after the approval by the President of the Philippines.
c. Fifteen days after the approval by Congress.
d. Fifteen days after the approval by the President of the Philippines.
A 27. According to National Budget Circular No. 519, Guidelines on the Release of Funds, dated
March 27, 2009, the obligational authorities for agencies to enter into commitments or
incur obligations during the year shall be issued comprehensively through:
a. Agency Budget Matrix (ABM) only
b. Issuance of Special Allotment Release Orders (SAROs) only
c. Agency Budget Matrix and issuance of SAROs
d. Either ABM or issuance of SAROs
C 28. According to National Budget Circular No. 519, Guidelines on the Release of Funds, dated March
27,
2009, the validity of funds available to the agency provides the following, EXCEPT
Page 29 of 30
GOVERNMENT,
AND
a. Continuing appropriation for MOOE and capital outlay shall be for two years.
b. Appropriations under GAA including personal services shall be for two years.
c. Appropriation under GAA shall for two years except personal service which shall lapse at
the end of the current year.
d. All SAROs issued chargeable against GAA under R.A. 9498 as re-enacted, shall be valid
while the new GAA is not yet in effect.
Page 30 of 30

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ALDERSGATE COLLEGE ACCOUNTING FOR

Module 2: Accounting for Budgetary Accounts

1. Budgetary Accounts System

The National Budget

Form and Contents of the National Budget

2. Summary financial statements setting forth:

a. Estimated expenditures and proposed appropriations necessary for the support of

Fundamental Principles of Fiscal Operations

Budget activities are governed by legal provisions/fundamental principles relating to financial

THE BUDGET PROCESS

Appropriations are approved by the legislative body in the form of:

1. A General Appropriation Law which covers most of the expenditures of government;

3. Budget Execution and Operation

The last phase of budget process consists of the following:

1. Periodic reporting by the government agencies of performances under their approved

Budgetary accounts consist of the following:

1. Appropriation - an authorization made by law or other legislative enactment, directing

Budgetary Accounts System

1. Physical and Financial Plan (PFP)

2. Monthly Cash Program (MCP)

3. Estimate of Monthly Income

4. List of Not Yet Due and Demandable Obligations

The Budgetary Accountability Reports include the following:

1. Quarterly Physical Report of Operations

2. Quarterly Financial Report of Operations

3. Quarterly Report of Actual Income

4. Statement of Allotment, Obligations and Balances

5. Monthly Report of Disbursements

General Guidelines on the Release of Funds

The Agency Budget Matrix

2. For Later Release

The following budgetary policies are still in effect:

Guidelines on the Release of Disbursement Authorities

1. Release of Notice of Cash Allocation (NCA)

2. Release of Non-Cash Availment Authority (NCAA)

3. Release of Cash Disbursement Ceiling (CDC)

Release of CDC shall be supported by the following accountability reports as consolidated by

Conduct of the Agency Performance Review

Common Fund System

Special Purpose Fund

Capital Outlay (CO) 80,000 20,000 15,000

Books of the Department of Budget and Management

Appropriations and allotments are to be controlled and monitored by the Department of

Department of Budget and Management

Capital Outlay Maintenance & O.E. Financial Expenses Personal Services

Date Re Allotmen Appropriatio Allotmen Appropriatio Allotmen Appropriatio Allotmen Appropriatio

Department of Budget and Management

Date Agency CO MOOE PS FE Total Balance

Department of Budget and Management

Date Ref NCA Replenishment Balance

Books of the Agency

The following are the registries in the books of the agency:

1. Registry of Allotments and Obligations - Personal Services (RAOPS)

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

Date Ref P.P.A. Account Allotment Obligation Balance

The Registry of Allotments and Obligations - Capital Outlay shall be

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

Date Ref P.P.A. Account Allotment Obligation Balance

Regular Agency Books Source

Transactions Account Title Account Code Debit Credit Books of

Accounting for Obligations