GOVERNMENT ACCOUNTING SYSTEM FOR NATIONAL GOVERNMENT AGENCIES

MODADV3 K34 GROUP 2 GUARIN ILAGAN JOVERES LABRO

NATURE OF GOVERNMENT ACCOUNTING

Processes of analyzing, recording, classifying, summarizing, and communicating all transactions involving the receipts and dispositions of government funds and property, and interpreting the results thereof.

As a process, it is concerned with the maintenance of records that show the propriety of transactions and account for assets and other resources available for use the classification of items to provide useful information necessary for control and efficient management operations the preparation of periodic financial reports

FUNDS: ACCOUNTING UNIT FOR GOVERNMENTAL ENTITY

a sum of money or other resources set aside for the purpose of carrying out specific activities Types of Funds -General Fund: includes all financial resources except those required to be accounted in another fund -Special Fund: includes the proceeds of specific revenue from taxes that are legally restricted to expenditures for specified purposes

BUDGETARY PROCEDURES

budget is submitted to DBM. DBM then forms the national budget Budget Authorization- national budget is submitted to the Legislative Body

Preparation and Presentation- prepared

implementation of various operational aspects of the budget Budget Accountability- evaluation of expenditures and performance against the predetermined budget

Budget Execution and Operation-

NEW GOVERNMENT ACCOUNTING SYSTEM Government Chart of Accounts Balance Sheet Accounts Assets Liabilities Current Assets Current Liabilities Investments Long Term Liabilities PPE Other Liabilities Other Assets Equity Government Equity Intermediate Accounts

INCOME AND EXPENSE ACCOUNTS

Income Accounts -General Income Accounts -Specific Income Accounts Expenses Accounts -Personal Services -Maintenance and Other Operating Expenses -Financial Expenses

NEW GOVERNMENT ACCOUNTING SYSTEM

Issued by Commission on Audit (COA) Adopts Commercial Accounting, DoubleEntry Bookkeeping, and Responsibility Accounting

BASIC OBJECTIVES
Simplify government accounting Conform to international accounting standards Generate periodic and relevant financial reports for better monitoring of performance

BASIC FEATURES AND POLICIES

Accrual Accounting One Fund Concept Accounting Books

-Regular Agency Books Journals: Cash Receipts, Cash Disbursements, Check Disbursements, General Journal Ledgers: General, Subsidiary for: cash, receivables, inventories, fixed assets, CIP, liabilties

-National Government Books Cash Journal, General Journal, General Ledger

Accounting Reports

Trial Balance: monthly, quarterly, preclosing, post-closing Balance Sheet Statement of Income and Expenses Cash Flow Statement: BS & IS Approach

Two Money Column Trial Balance

Allotment and Obligation

No JE to record receipt of allotments and incurrence of obligations Registries are maintained to control allotments and obligations. These registries are: -Capital Outlay -Maintenance and Other Operating Expenses -Personal Services -Financial Expenses

Separately classified from MOOE

Financial Expenses

Notice of Cash Allocation Cash-National Treasury-Modified Disbursement System Subsidy Income from National Government

Perpetual Inventory of Supplies and Materials Valuation of Inventory- Moving Average

Method

-Liability recognized as bills are received -Bonus paid added to cost of project -Liquidated damages deducted from cost -Related Expenses incurred shall be capitalized

Construction of Assets

Depreciation- straight-line method Allowance for Doubtful Accounts Elimination of Contingent Asset Accounts

-Shown only on notes to FS -Contingent liability is recognized if it has a reasonable assurance of maturing into an actual liability

Recognition of Liability

-Recognized at the time goods and services are accepted or rendered and supplier/creditors bills are received

Accrued Interest Borrowings and Loans -recorded directly to the appropriate

Registry of Public Infrastructures/Investments Elimination of Corollary and Negative Entries

liabilities accounts

-acquisition of assets recognized as capital expenditures -correcting entries are made by reversing or adjusting entries, all in positive amounts

ACCOUNTING FOR APPROPRIATIONS, ALLOTMENTS, AND NOTICE OF CASH ALLOCATION

Appropriation- a formal authorization under a legislative act for an agency to incur expenditures up to a stated sum for specified purposes Allotment- authorization issued by DBM to the agency, which allows it to incur obligations for specified amounts Notice of Cash Allocation- issued by DBM to the agency authorizing it to disburse by checks to a certain amount

Appropriations and Allotments are not journalize, only a memo entry is made in the Registry of Allotments and Obligations Receipt of NCA

Cash-National Treasury-Modified Disbursement System Subsidy Income from National Government Due to BIR Subsidy Income from National Government

Due to BIR Cash-National Treasury-Modified Disbursement System

ACCOUNTING FOR OBLIGATIONS

Incurrence of an obligation is not journalize by the agency. Instead, a memo entry is made under the Registry of Allotments and Obligations.

ACCOUNTING FOR DISBURSEMENTS

All of the following transactions are journalize by debiting a specific account being paid for and a credit to Cash- National Treasury- MDS -Personal Services -Maintenance and Other Operating Expenses -Financial Expenses -Purchase/Construction of fixed assets charged to capital outlay -Miscellaneous Transactions

ACCOUNTING FOR INCOME, COLLECTIONS, AND RELATED TRANSACTIONS The accounting procedures for the following will depend on the agencys authority to use the income collected -Taxes -Operating and Service Income -Grants and Donations -Borrowings -Miscellaneous Receipts and Collections

Without Authority to Use -All revenues collected by the agency are to be remitted to the national treasury -Such income shall be recorded in a separate book of accounts and maintained in the National Government Books -Collections shall be credited to the income account, then debited upon remittance to the National Treasury

Ex. Cash- Collecting Officer Income Taxes- Individuals Income Taxes- Individuals Cash- Collecting Officer

With Authority to Use -Collection shall be recorded as income in the Regular Agency Books

Ex. Accounts Receivable Rent Income

Cash- Collecting Officer Accounts Receivable

TRIAL BALANCE

Under OGAS, a four column trial balance is required. Under NGAS, only a twomoney column trial balance is required
Account Code Debit Credit

Account Title

ADJUSTING ENTRIES
Adjustments for: -Accrued Items -Deferred Items

For depreciation, straight line method is used

Depreciation Expense Accumulated Depreciation

CLOSING ENTRIES

Subsidy- Income from National Government Cash- National Treasury- MDS

1.

Unused Notice of Cash Allocations Nominal or Temporary Accounts Close all income accounts to Income and Expense Summary Close all expense accounts to Income and Expense Summary Close the balance of Income and Expense Summary to Retained Operating Surplus Close the balance of Prior Years Adjustments to Retained Operating Surplus Close the balance of the Retained Operating Surplus to Government Equity

2.
3. 4. 5.

FINANCIAL STATEMENTS

Worksheet
Account Title Pre Closing Trial Balance Adjustme nt Post Closing Trial Balance Statement of Income and Expenses Balance Sheet

Account Code

Dr:Cr

Dr:Cr

Dr:Cr

Dr:Cr

Dr:Cr

Statement of Income and Expenses -explains the changes in the agencys equity resulting from operations and economic activities during the period

Balance Sheet -provides information on the agencys resources, its obligations, and the government equity in the agency Cash Flow Statement -provide relevant information about the agencys inflows and outflows of cash during the year

Items included in the Cash Flow Statement -Cash Flows from Operating Activities -Cash Flows from Investing Activities -Cash Flows from Financing Activities -Effect of Foreign Exchange Rates -Net Increase (Decrease) in Cash -Non-cash Investing and Financing Activities

MULTIPLE CHOICE- THEORETICAL

1. The accounting unit of a government entity is:

A. Budget

B. Fund
C.

Cash D. Equity

2. The fund that is available for all functions of the government is:
Special Fund B. Fiduciary Fund C. Plant Fund D. General Fund
A.

3. This fund includes the proceeds of specific revenue from taxes that are legally restricted to expenditures for specified purposes:
A. B. C. D.

Special Fund Fiduciary Fund Plant Fund General Fund

4. This phase of the Budgetary Procedures which involves the submission of the National Budget to the Legislative Body for review, deliberation and formulation of an Appropriation Bill:
A. B. C. D.

Preparation and Presentation Budget Authorization Budget Execution Budget Accountability

5. Under the NGAS, the method of accounting that is used in recording transactions of the government is:
A. B.

C.
D.

Obligation Accounting Commercial Accounting Liquidation Accounting Fund Accounting

6. The government agency that is responsible for the release of allotments to various government agencies is:
A. B.

C.
D.

Bureau of Treasury Department of Budget and Management Department of Finance Commission on Audit

7. A standardized system of releasing allotments based on a predetermined categorization or desegregations of agency budgets.
A.

B.
C. D.

Modified Disbursing System Simplified Fund Release Scheme Budgetary System Allotment System

8. A plan of financial operation embodying an estimate or proposed expenditures for a given period, and the proposed means of financing them is a:
A.

B.
C. D.

Budget Master Plan Financial Plan Fund Plan

9. Which of the following is not a feature of government accounting?

A.
B. C. D.

Accounting is done by fund Budgetary accounts is used Preparation of Income Statement is a must Capital accounts of ownership are absent

10. Which of the following account under the NGAS is credited when Notice of Cash Allocation is received by the agency?
A. B.

C.
D.

National Clearing Account Obligations Incurred Subsidy Income from National Government Appropriations Allotted

REFERENCE:

http://www.coa.gov.ph/NGAS/natl/natl_ngastocvol1.asp