Chapter 4: Accounting for

Budgetary Accounts
Article
ArticleVI
VIof
ofthe
the1987
1987Constitution
Constitution
Section
Section29
29(1)
(1)provides,
provides,“No
“Nomoney
money
shall
shallbe
bepaid
paidout
outof
ofthe
theTreasury
Treasury
except
exceptin
inpursuance
pursuanceof ofan
an
appropriation
appropriationby bylaw.”
law.”
Appropriations
Appropriations Allotment
Allotment NCA
NCA
GAA
GAA DBM
DBM
ACCOUNTING
ACCOUNTINGSYSTEMS
SYSTEMS

General
GeneralAccounting
AccountingPlan
Plan(GAP)
(GAP)––the
the
overall
overallaccounting
accountingsystem
systemofofaagovernment
government
agency
agencyororunit.
unit.
The
Thefollowing
followingare
areobjective-specific
objective-specificaccounting
accounting
systems:
systems:

1.1.Budgetary
BudgetaryAccounts
AccountsSystem
System
2.2.Receipt/Income
Receipt/Incomeand
andDeposit
DepositSystem
System
3.3.Disbursement
DisbursementSystem
System
4.4.Financial
FinancialReporting
ReportingSystem
System
Fundamental
FundamentalPrinciples
Principlesof
ofFiscal
FiscalOperations
Operations

1.1.No
Nomoney
moneyshall
shallbe
bepaid
paidout
outof
ofthe
thepublic
public
treasury
treasuryor
ordepository
depositoryexcept
exceptin
inpursuance
pursuanceofof
an
anappropriation
appropriationlaw
lawor
orother
otherspecific
specific
statutory
statutoryauthority;
authority;

2.2.Government
Governmentfunds
fundsororproperty
propertyshall
shallbe
be
spent
spentor
orused
usedsolely
solelyfor
forpublic
publicpurposes;
purposes;
3.3.Trust
Trustfunds
fundsshall
shallbe
beavailable
availableand
andmay
maybe
be
spent only for the specific purpose for which the
spent only for the specific purpose for which the
trust
trustwas
wascreated;
created;

4.4.Fiscal
Fiscalresponsibility
responsibilityshall,
shall,totothe
thegreatest
greatest
extent,
extent,bebeshared
sharedby
byall
allthose
thoseexercising
exercisingauthority
authority
over the financial affairs, transactions,
over the financial affairs, transactions, andand
operations
operationsofofthe
thegovernment
governmentagency;agency;
5.5.Disbursements
Disbursementsor ordisposition
dispositionof ofgovernment
government
funds
fundsororproperty
propertyshall
shallinvariably
invariablybearbearthe
the
approval
approvalofofthe
theproper
properofficials;
officials;

6.6.Claims
Claimsagainst
againstgovernment
governmentfunds
fundsshall
shallbe
be
supported
supportedwith
withcomplete
completedocumentation;
documentation;
7.7.All
Alllaws
lawsand
andregulations
regulationsapplicable
applicabletoto
financial
financialtransaction
transactionshall
shallbe
befaithfully
faithfully
adhered to; and
adhered to; and

8.8.Generally
Generallyaccepted
acceptedprinciples
principlesand
andpractices
practices
of accounting, as well as, of sound
of accounting, as well as, of sound
management
managementand andfiscal
fiscaladministration
administrationshall
shallbe
be
observed,
observed,provided
providedthey
theydodonot
notcontravene
contravene
existing laws and regulations.
existing laws and regulations.
THE
THENATIONAL
NATIONALBUDGET BUDGETisisaaplan
planfor
for
financing
financingthe
thegovernment
governmentactivities
activitiesfor
foraafiscal
fiscal
year prepared and submitted by responsible
year prepared and submitted by responsible
executive
executiveto
toaarepresentative
representativebody
bodywhose
whose
approval
approvaland
andauthorization
authorizationare
arenecessary
necessary
before the plan can be executed.
before the plan can be executed.
PERFORMANCE-INFORMED
PERFORMANCE-INFORMED
BUDGETING
BUDGETING

ItItisisaabudgeting
budgetingapproach
approachthat
thatuses
uses
performance
performanceinformation
informationto
toassist
assistin
indeciding
deciding
where the funds will
where the funds will go.go.
KINDS OF
KINDS OF BUDGETBUDGET
1.1.As to Nature
As to Nature
a.a.Annual Budget
Annual Budget
b.b.Supplemental Budget
Supplemental Budget
c.c.Special Budget
Special Budget

2.2.As to Basis
As to Basis
a.a.Performance Budget
Performance Budget
b.b.Line-Item Budget
Line-Item Budget
3.3.As to Approach and Technique
As to Approach and Technique
a.a.Zero-Based Budgeting – a process which
Zero-Based Budgeting – a process which
requires systematic consideration of
requires systematic consideration of all all
programs, projects and activities with define
programs, projects and activities with define
ranking procedures.
ranking procedures.

b.b.Incremental Approach – a budget where

Incremental Approach – a budget where
only additional requirements need
only additional requirements need
justifications.
justifications.
THE
THEBUDGET
BUDGETCYCLE
CYCLE

1.1.Budget
BudgetPreparation
Preparation
2.2.Budget
BudgetLegislation
Legislation
3.3.Budget
BudgetExecution
Execution
4.4.Budget
BudgetAccountability
Accountability
BUDGET
BUDGETPREPARATION
PREPARATION

This
Thiscovers
coversestimation
estimationofofgovernment
governmentrevenues,
revenues,the
the
determination of budgetary priorities and activities
determination of budgetary priorities and activities
within
withinthe
theconstraints
constraintsimposed
imposedby byavailable
availablerevenues
revenues
and
andbybyborrowing
borrowinglimits,
limits,and
andthe
thetranslation
translationofof
approved
approvedpriorities
prioritiesand
andactivities
activitiesinto
intoexpenditure
expenditure
levels.
levels.
President’s
President’sBudget
BudgetMessage
Message(PBM)
(PBM)
Budget
BudgetofofExpenditures
Expendituresand
andSources
SourcesofofFinancing
Financing
National
NationalExpenditure
ExpenditurePlan
Plan(NEP)
(NEP)
National
NationalExpenditure
ExpenditurePlan
Plan(NEP)
(NEP)
Staffing
StaffingSummary
Summary
BUDGET
BUDGETLEGISLATION
LEGISLATION

ItItisisthe
thesecond
secondphase
phaseofofthethebudget
budgetprocess
processrelative
relativetoto
the
theenactment
enactmentofofthe
theGeneral
GeneralAppropriation
AppropriationBillBill
based
basedon onthe
thebudget
budgetofofreceipts
receiptsand
andexpenditures,
expenditures,
generally,
generally,submitted
submittedby bythe
thePresident
Presidentofofthe
the
Philippines within 30 days from the opening
Philippines within 30 days from the opening of its of its
regular
regularsession,
session,as
asthe
thebasis
basisofofthe
thegeneral
general
appropriation
appropriationbill. bill.
BUDGET
BUDGETEXECUTION
EXECUTION

This
Thisisiswhere
wherethethepeople’s
people’smoney
moneyisisactually
actuallyspent.
spent.As
As
soon
soonas asthe
theGAA
GAAisisenacted,
enacted,the
thegovernment
governmentcan can
implement
implementits itspriority
priorityprograms
programsandandprojects.
projects.
BUDGET
BUDGETEXECUTION
EXECUTION

1.1.RELEASE
RELEASEGUIDELINES
GUIDELINESAND
ANDPROGRAM
PROGRAM

The
Thebudget
budgetexecution
executionbegins
beginswith
withDBM’s
DBM’sissuance
issuanceofof
guidelines
guidelineson
onthe
therelease
releaseand
andutilization
utilizationofoffunds.
funds.
BUDGET
BUDGETEXECUTION
EXECUTION

2.2.BUDGET
BUDGETEXECUTION
EXECUTIONDOCUMENTS
DOCUMENTS(BEDs)
(BEDs)

Agencies
Agenciesarearerequired
requiredtotosubmit
submittheir
theirBEDs
BEDsatatthe
thestart
startofof
Budget
BudgetExecution.
Execution.These
Thesedocuments
documentsoutline
outlineagency
agencyplans
plans
and
andperformance
performancetargets.
targets.These
TheseBEDs
BEDsinclude
includethe
the
physical
physicaland
andfinancial
financialplan,
plan,monthly
monthlycash
cashprogram,
program,
estimate of monthly income, and list of obligations that
estimate of monthly income, and list of obligations that are are
not
notyet
yetdue
dueand
anddemandable.
demandable.
BUDGET
BUDGETEXECUTION
EXECUTION

3.3.ALLOTMENT
ALLOTMENTAND
ANDCASH
CASHRELEASE
RELEASEPROGRAMMING
PROGRAMMING
To ensure that releases fit the approved Fiscal Program,
To ensure that releases fit the approved Fiscal Program, the the
DBM prepares an Allotment Release Program (ARP)
DBM prepares an Allotment Release Program (ARP) to set a to set a
limit for allotments issued to an agency and on the aggregate.
limit for allotments issued to an agency and on the aggregate.
The ARP of each agency corresponds to the total amount
The ARP of each agency corresponds to the total amount of of
the agency-specific budget under the GAA, as well
the agency-specific budget under the GAA, as well as as
Automatic Appropriations. A Cash Release Program
Automatic Appropriations. A Cash Release Program (CRP) is(CRP) is
also formulated alongside that to set a guide for disbursement
also formulated alongside that to set a guide for disbursement
levels for the year and for every month.
levels for the year and for every month.
BUDGET
BUDGETEXECUTION
EXECUTION

4.4.ALLOTMENT
ALLOTMENTRELEASE
RELEASE

Allotments,
Allotments,which
whichauthorize
authorizean anagency
agencytotoenter
enterinto
intoan
an
obligation,
obligation,are
areeither
eitherrelease
releasebybyDBM
DBMtotoall
allagencies
agencies
comprehensively
comprehensivelythrough
throughthetheAgency
AgencyBudget
BudgetMatrix
Matrix(ABM)
(ABM)
and
andindividually
individuallyvia
viaSpecial
SpecialAllotment
AllotmentRelease
ReleaseOrders
Orders
(SAROs).
(SAROs).However,
However,as asprovided
providedbybythe
theGAM,
GAM,thethenew
new
obligational
obligationalauthority
authorityincludes:
includes:General
GeneralAppropriation
AppropriationActAct
Release
ReleaseDocument
Document(GAARD),
(GAARD),Special
SpecialAllotment
AllotmentRelease
Release
Order
Order(SARO),
(SARO),and andGeneral
GeneralAllotment
AllotmentRelease
ReleaseOrder
Order
(GARO).
(GARO).
BUDGET
BUDGETEXECUTION
EXECUTION

4.4.a.a.ALLOTMENT
ALLOTMENTRELEASE
RELEASE
General
GeneralAppropriation
AppropriationActActRelease
ReleaseDocument
Document(GAARD)
(GAARD)
This
Thisserves
servesasasthe
theobligational
obligationalauthority
authorityfor
forthe
thecomprehensive
comprehensive
release
releaseofofbudgetary
budgetaryitems
itemsappropriated
appropriatedininthe
theGeneral
General
Appropriation
AppropriationAct
Act(GAA),
(GAA),categorized
categorizedasasFor
ForComprehensive
Comprehensive
Release (FCR).
Release (FCR).
BUDGET
BUDGETEXECUTION
EXECUTION

4.4.b.b.ALLOTMENT
ALLOTMENTRELEASE
RELEASE
Special
SpecialAllotment
AllotmentReleaseReleaseOrder
Order(SARO)
(SARO)
This
Thiscovers
coversbudgetary
budgetaryitemsitemsunder
underFor
ForLater
LaterRelease
Release(FLR)
(FLR)
(negative
(negativelist)
list)ininthe
theentity
entitysubmitted
submittedBudget
BudgetExecution
ExecutionDocuments
Documents
(BEDs),
(BEDs),subject
subjecttotocompliance
complianceofofrequired
requireddocuments/clearances.
documents/clearances.
BUDGET
BUDGETEXECUTION
EXECUTION

4.4.c.c.ALLOTMENT
ALLOTMENTRELEASE
RELEASE
General
GeneralAllotment
AllotmentRelease
ReleaseOrderOrder(GARO)
(GARO)
This is a comprehensive authority issued to all national
This is a comprehensive authority issued to all national
government
governmentagencies,
agencies,iningeneral,
general,totoincur
incurobligations
obligationsnotnot
exceeding
exceedingan anauthorized
authorizedamount
amountduring
duringaaspecified
specifiedperiod
periodfor
forthe
the
purpose
purposeindicated
indicatedtherein.
therein.ItItcovers
coversautomatically
automaticallyappropriated
appropriated
expenditures
expenditurescommon
commontotomost,
most,ififnot
notall,
all,agencies
agencieswithout
withoutneed
needofof
special clearance or approval from competent
special clearance or approval from competent authority.authority.
BUDGET
BUDGETEXECUTION
EXECUTION

5.5.INCURRING
INCURRINGOBLIGATIONS
OBLIGATIONS
InInimplementing
implementingprograms,
programs,activities
activitiesand
andprojects,
projects,agencies
agenciesincur
incur
liabilities
liabilitieson
onbehalf
behalfofofthe
thegovernment.
government.Obligations
Obligationsare areliabilities
liabilities
legally
legallyincurred,
incurred,which
whichthethegovernment
governmentwillwillpay
payfor.
for.
These are various ways that an agency “obligates”. For
These are various ways that an agency “obligates”. For example,example,
when
whenitithires
hiresstaff
staff(an(anobligation
obligationtotopay
paysalaries),
salaries),receives
receivesbillings
billings
for
forthe
theuse
useofofutilities,
utilities,ororenters
entersinto
intocontract
contractwith
withan
anentity
entityfor
forthe
the
supply
supplyofofgoods
goodsororservices.
services.
BUDGET EXECUTION

6. CASH ALLOCATION
To authorize an agency to pay the obligations it incurs, DBM
issues a disbursement authority.

Most of the time, it takes the form of a Notice of Cash Allocation

(NCA); and in special cases, the Non-Cash Availment
Authority (NCAA), Cash Disbursement Ceiling (CDC) and
Notice of Transfer of Allocation (NTA).
BUDGET EXECUTION

6.a. CASH ALLOCATION

NOTICE OF CASH ALLOCATION

This is the authority issued by the DBM to central, regional, and
provincial offices and operating units to pay operating expenses,
purchases of supplies and materials, acquisition of PPE, accounts
payable, and other authorized disbursement through the issue of
Modified Disbursements System (MDS) checks, Authority to Debit
Account (ADA) or other modes of disbursements.
BUDGET EXECUTION

6.b. CASH ALLOCATION

Non-Cash Availment Authority

This is the authority issued by the DBM to agencies to cover the
liquidation of their actual obligations incurred against available
allotments for availment of proceeds from loans/grants through
supplier’s credit/constructive cash.
BUDGET EXECUTION

6.c. CASH ALLOCATION

Cash Disbursements Ceiling (CDC)

This is the authority issued by the DBM to the Department of
Foreign Affairs (DFA) and Department of Labor and Employment
(DOLE) to utilize their income collected/retained by their Foreign
Service Posts (FSPs) to cover their operating requirements, but
not to exceed the release allotment to the said post.
BUDGET EXECUTION

6.d. CASH ALLOCATION

Notice of Transfer of Allocation (NTA)

This is the authority issued by the Central Office to its regional
and operating units to pay their operating expenses, purchases
of supplies and materials, acquisition of PPE, accounts payable,
and other authorized disbursements through the issue of MDS
checks, ADA or other modes of disbursements.
BUDGET EXECUTION

7. DISBURSEMENT
This is the final step of the budget execution phase, where government
monies are actually spent. The Modified Disbursement Scheme is mostly
used, where disbursements of national government agencies chargeable
against the Treasury are made through government servicing banks, such as
the Land Bank of the Philippines.

The budget process, of course, does not end when government agencies
spend public funds: each and every peso must be accounted for to ensure
that is used properly, contributing to the achievement of socio-economic goals.
BUDGET ACCOUNTABILITY

This phase happens alongside the Budget Execution

phase.

Through Budget Accountability, the DBM monitors the

efficiency of fund utilization, assesses agency
performance and provides a vital basis for reforms and
new policies.
BUDGET ACCOUNTABILITY

1. PERFORMANCE & TARGET OUTCOMES

Agencies are held accountable not only for how these use public funds ethically,
but also on how these attain performance targets and outcomes using available
resources.

These performance measures are set alongside the preparation of the National
Budget; and these are included in the OPIF (Organizational Performance
Indicator Framework) Book of Outputs.

Prior to the execution of the enacted National Budget, these performance targets
are firmed up during the preparation of BEDs.
BUDGET ACCOUNTABILITY

2. BUDGET AND FINANCIAL ACCOUNTABILITY REPORTS

(BFARs)
Submitted by agencies on a monthly and quarterly basis, BFARs
are required reports that show how agencies used their funds and
identify their corresponding physical accomplishments.

These include quarterly physical and financial reports of

operations; quarterly income reports, a monthly statement of
allotments, obligations and balances; and monthly report of
disbursements.
BUDGET ACCOUNTABILITY

3. NO REPORT, NO RELEASE
Starting 2012, the DBM will be withholding certain fund releases to
agencies if these fail to submit their Budget Accountability Reports. In
particular, these will be funds from the Miscellaneous Personnel Benefits
Fund (MPBF) for compensation adjustments under the Salary
Standardization Law, provisions for unfilled positions and employee
clothing allowance.

These funds to be withheld are only limited to agencies’ MFBF allotments

so that only the agencies are penalized and that the implementation of
critical programs and projects will not be disrupted. Errant and compliant
agencies will also be posted online for public scrutiny.
BUDGET ACCOUNTABILITY

4. REVIEW OF AGENCY PERFORMANCE

The DBM regularly reviews the financial and physical performance of
agencies. Actual utilization of funds and physical accomplishments, as
indicated in the agencies’ BFARs, are evaluated against their targets as
identified via OPIF and in the agencies’ BEDs. Agency Performance
Reviews (APRs) are conducted quarterly or every semester, as the case
may be.

An annual Budget Performance Assessment Review (BPAR) is

conducted to determine each agency’s accomplishments and
performance by the year-end. The DBM regularly reports results to the
President.
BUDGET ACCOUNTABILITY

5. AUDIT
Auditing is not within the DBM’s jurisdiction, and is instead
lodged under the Commission on Audit (COA). Nonetheless,
auditing is critical in ensuring agency accountability in the
use of public funds.

The DBM uses COA’s audit reports in conforming agency

performance, determining budgetary levels for agencies and
addressing issues in fund usage.
BUDGET ACCOUNTABILITY

6. Performance-Based Incentive System

The DBM is also in the process of establishing a

performance-based incentive system – which will recognize
and reward good performance among government
employees- to help improve the efficiency of service delivery
across all government institutions.
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.
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

operations 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.
General Guidelines on the Release of Funds

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 (ARP) may already be established.
General Guidelines on the Release of Funds

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,
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.
Guidelines on the Release of Disbursement Authorities

1. Release of Notice of Cash Allocation (NCA)

The National Budget Circular provides that an initial comprehensive NCA shall
be issued directly to the Operating Units (OUs) covering the first semester
requirement (i.e., January to June) chargeable against the current year budget.
This shall be based on the submitted Monthly Disbursement Program (MDP),
which shall include current year requirements and prior years’ accounts payable.

Additional NCAs may be issued for allotments charged against Continuing

Appropriations under RA No. 10633 and Supplemental Appropriation under RA
No. 10652, as well as prior year’s obligation which become accounts payable in
the current year.
Guidelines on the Release of Disbursement Authorities

1. Release of Notice of Cash Allocation (NCA)

Succeeding comprehensive NCA shall be issued to cover the 2nd semester
requirements for regular budget shall be subject to the submission of Financial
Accountability Reports (FARs)/Budget Accountability Reports (BARs) as of end of
June 30 and consistent with the DBCC-approved Monthly Disbursement Program.

To maximize the use of the available NCAs under the Regular MDS account, the
Common Fund System shall be adhered to. Under this system, cash allocations
released to NGAs/Ous under Regular MDS sub-account shall be used also to cover
payment of current year and prior year’s accounts payable of all creditors/payees
(external and internal) consistent with the Monthly Disbursement Program.
Guidelines on the Release of Disbursement Authorities

1. Release of Notice of Cash Allocation (NCA)

National Budget Circular further provides that NCA issued and credited to the Regular
MDS Sub-Accounts of agencies/operating units for their regular operation, shall be valid
until the last working day of the 3rd month of that quarter pursuant to the DBM Circular
Letter No. 2013-12. NCA to the Special MDS Accounts of agencies shall be valid until the
last working day of the following month when the NCA was issued pursuant to the DBM
Budget Circular No. 2013-1. NCA issued for trust receipts and credited to the Trust MDS
Account of agencies shall be valid until the last working day of the year. And, NCA issued
to the Bureau of the Treasury for working funds of agencies shall be valid until the last
working day of the year. Thus, any unutilized NCA corresponding to the book balance, net
of the outstanding checks, shall automatically lapse at the end of those periods. This shall
be monitored through Registry of Allotments and Notice of Cash Allocations (RANCA).
Problem:

Prepare the accounting entries to recognize the following

receipts of NCA:
1. Receipt of NCA for Regular Agency Fund in the amount of
P 100,000.00.
2. Receipt of NCA for Special Account in the General Fund in
the amount of P 100,000.00.
3. Receipt of NCA for Trust Receipts Fund in the amount of P
100,000.00.
1. Regular Agency Fund

Cash-Modified Disbursement System (MDS), Regular P 100,000.00

Subsidy from National Government P 100,000.00
To recognize receipt of NCA for Regular Agency Fund.

2. Special Account in the General Fund

Cash-Modified Disbursement System (MDS), Special Account P 100,000.00

Cash-Treasury/Agency Deposit, Special Account P 100,000.00
To recognize receipt of NCA for Special Account in the General Fund.

3. Trust Receipts Fund

Cash-Modified Disbursement System (MDS), Trust P 100,000.00

Cash-Treasury/Agency Deposit, Trust P 100,000.00
To recognize the receipt of NCA for Trust Receipts Fund.
Guidelines on the Release of Disbursement Authorities

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

Department/Agencies/Operating Units availing of foreign loan proceeds
through direct payment chargeable against availment allotment, shall submit
a request for the issuance of NCAA supported by the following requirements:
Photocopy of the application for withdrawal or equivalent document covering
the amount requested; List of Allotments and corresponding obligations
incurred for the specific foreign loan assisted project against which the
disbursements shall be applied; and Details of Disbursements expressed
both in peso and equivalent foreign currency as indicated in the application.
Guidelines on the Release of Disbursement Authorities

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

Request of NCAA shall be used to cover the liquidation of actual
obligations incurred by the agency within their available allotments,
pursuant to DBM-COA-DOF Joint Circular 2-97 and CL No. 2003-12.
It is emphasized that non-issuance of NCAAs for availments of
proceeds from loans/grants through direct payments (already taken
up as constructive payments per BTr report) results to accounts
payable build up in the agency books.
Exercise:

Prepare the accounting entry for the receipt of Non-Cash

Availment Authority in the amount of P 1,000,000.00.
Receipt of Non-Cash Availment Authority

Accounts Payable P 1,000,000.00

Subsidy from National Government P 1,000,000.00
To recognize the receipts of NCAA.
Guidelines on the Release of Disbursement Authorities

3. Release of Cash Disbursement Ceiling (CDC)

CDC is an authority issued by DBM to DFA and DOLE to utilize their income
collected and retained by their Foreign Service Posts (FSPs) to cover its
operating requirements but not to exceed the released allotment for the said
post. Non-issuance of CDCs for actual utilization of retained income by FSPs
(already taken up as revenue and disbursements per BTr report) results to
unreconciled accounts between BTr and agency books.

Request of CDC shall be supported by the following accountability reports as

consolidated by DFA and DOLE home office: Monthly Report of Income and BTr
certification on actual income collected.
Exercise:

Prepare the accounting entries in the books of DFA and DOLE for the
following transactions:
1. To recognize collection of revenue of FSPs in the amount of P
100,000.00.
2. To recognize deposit of collections to authorized servicing bank of
FSPs in the amount of P 100,000.00
3. To recognize receipt of CDC from DBM in the amount of P 80,000.00.
4. To recognize payment of quarters allowance-civilian in the amount of
P 50,000.00 and rents-buildings and structures in the amount of P
30,000.00.
DFA and DOLE Books

1. Collection of FSPs

Cash-Collecting Officers P 100,000.00

Passport and Visa Fees P 100,000.00
To recognize collection of revenue of FSPs.

2. Deposit of collections

Cash in Bank-Foreign Currency, Current Account P 100,000.00

Cash-Collecting Officers P 100,000.00
To recognize deposit of collections to authorized servicing bank of FSPs.

3. Receipt of CDC from DBM

Cash-Constructive Income Remittance P 80,000.00

Subsidy from National Government P 80,000.00
To recognize receipt of CDC from DBM.

4. Payment of expenses charged to CDC

Quarters Allowance-Civilian P 50,000.00

Rents-Buildings and Structures P 30,000.00
Cash in Bank-Foreign Currency, Current Account P 80,000.00
To recognize payment of expenses charged to CDC.
Exercise:

Prepare the accounting entry in the books of BTr to

recognize constructive receipt of remitted collections by
FSPs and disbursements charged to the issued CDCs to
FSPs in the amount of P 80,000.00.
BTr Books:

Subsidy to National Government Agencies (NGAs) P 80,000.00

Cash-Constructive Income Remittance P 80,000.00
To recognize constructive receipt of remitted collections by FSPs and
disbursements charged to issued CDC to FSPs.
Guidelines on the Release of Disbursement
Authorities

4. Release of Notice of Transfer of Allocation (NTA)

Similar with NCA, no MDS check/ADA shall be issued by the
Regional Offices/Operating Units without the covering NTA. Hence,
the total MDS checks issued shall not exceed the total NTA
received. It shall be monitored through the maintenance of the
Registry of Allotment and Notice of Transfer of Allocation (RANTA).
Exercise:

Prepare the accounting entries in the books of Central

Office and Regional Office for the transfer of allocation
from Central Office to Regional Office in the amount of P
500,000.00.
Central Office Books:

Subsidy to Regional Office/Staff Bureaus P 500,000.00

Cash-Modified Disbursement System (MDS), Regular P 500,000.00
To recognize transfer of allocation to Regional Office.

Regional Office Books:

Cash-Modified Disbursement System (MDS), Regular P 500,000.00

Subsidy from Central Office P 500,000.00
To recognize transfer of allocation from Central Office.
REPORTING REQUIREMENTS

Budget Execution Documents (BEDs)

-BEDs contain the agencies’ targets and plans for a financial year.

-According to National Budget Circular, all departments/agencies/operating units are

mandated to prepare the BEDs based on the National Expenditure Program (NEP), without
waiting for the approval of the General Appropriation Act and submit them to DBM not later
than November 30.

- Upon approval of the GAA there are changes made by Congress from the NEP, the
agencies/operating units shall identify affected PAPs, MFOs and targets to be adjusted.
Accordingly, department/agencies concerned shall submit their revised plans highlighting the
adjustments using the same BED forms on or before January 7 of the year.
REPORTING REQUIREMENTS

BED No. 1: Financial Plan (FP)

This document shall include the comparative obligation levels for the budget year
and current year, such as: the targeted commitments/obligations per NEP for the
budget year broken down by quarter; and the actual obligations for the current
year as of September 30 and the emerging level of obligations for the remaining
quarter (October 1 to December 31). The budget year’s total targeted
commitments/obligations under the Current Year’s Budget should equal amount
indicated in the NEP, which is segregated into “Comprehensive Release” and “For
Later Release” (Negative Release).
REPORTING REQUIREMENTS

BED No. 2: Physical Plan (PP)

This document shall consist the performance indicators and targets of department/agency,
such as:
- For Operations, the performance indicators by Major Final Outputs (MFOs).
- For Major Programs and Projects committed to the President and closely monitored by
the Presidential Management Staff.
- For other projects, consider those milestones indicated in the approved project profile.
For the budget year, it is emphasized that MFOs and major programs and projects shall be
the same as those appearing in the Financial Plan.
REPORTING REQUIREMENTS

BED No. 3: Monthly Disbursement Program (MDP)

This shall be used by DBM as basis for determining the monthly level of NCAs/other
disbursement authorities to be used to national government agencies. It shall reflect the
total cash and non-cash program for the budget year by type of fund category, by allotment
class and by type of disbursement authority, such as:
- Notice of Cash Allocation (NCA) for cash requirements of the national government
agencies through the authorized government servicing banks of the Modified
Disbursement System (MDS).
-Cash Disbursement Ceiling (CDC) for authorized disbursements charged against
income collected and retained by the Foreign Service Posts of DFA and DOLE.
REPORTING REQUIREMENTS

BED No. 3: Monthly Disbursement Program (MDP)

- Non-Cash Availment Authority (NCAA) for the cost of goods and services paid
directly by lending institutions to creditors of the NGAs/GOCCs implementing a
foreign assisted projects.
- Tax Remittance Advice (TRA) for the remittance of withheld taxes computed or
estimated as follows: For Personnel Services (PS) 8% and for Maintenance and
Other Operating Expenses (MOOE) and Capital Outlay (CO) 5%.
- Others for the tax expenditures, such as: Custom Duties and Taxes, and BTr
Documentary Stamps, etc.
REPORTING REQUIREMENTS

BED No. 4: Annual Procurement Plan for Common-Use Supplies

and Equipment (APP-CSE)

This shall reflect the monthly quantity and cash requirements by items
categorized into: Available at Procurement Service Stores, and other
items not available at Procurement Service but regularly purchased from
other sources. The quarterly cash requirements as reflected in the APP-
CSE shall serve as guide of the agency for payment of purchase made.
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

With the implementation of several structural reforms in 2014, such as: the adoption
of the General Appropriation Act as a Release Document (GAARD), the Unified
Accounts Code Structure (UACS), the Philippine Public Sector Accounting Standards
(PPSAS), and the integration of the Performance-Informed Budget (PIB), there is a
growing need to adapt to these innovations vis-à-vis the harmonized Budget and
Financial Accountability Reports (BFARs), as prescribed by the DBM and COA, to
effectively report, monitor and/or evaluate agency performance versus plans and
targets which shall serve as basis for sound policy decisions.
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

According to COA and DBM Joint Circular No. 2014-1, Guidelines Prescribing the Use of
Modified Formats of the Budget and Financial Accountability Reports (BFARs), dated July
2, 2014, the following reports/documents are required for submission to the DBM and
COA:

1. Quarterly Physical Report of Operations (QPRO) – BAR No.1

This report shall reflect the department’s/agency’s actual physical accomplishments as
of given quarter in terms of performance measures indicated in its Physical Plan in BED
No. 2. This shall be submitted to COA and DBM within 30 days after the end of each
quarter.
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

2. Statement of Appropriations, Allotments, Obligations, Disbursements and Balances
(SAAODB) – FAR No. 1
This report shall reflect the authorized appropriations and adjustments, total allotments
received including transfers/adjustments, total obligations, total disbursements and the
balances of unreleased appropriations, unobligated allotments, and unpaid obligations of a
department/office/agency by fund cluster (i.e., equivalent to old codes for Fund 101, 102, 151,
etc.) by allotment class. It is presented by the following
- Fund authorization
- Major Final Output (MFO)
- Program/Activity/Project (PAP)
- Major Programs/Projects
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

3. Statement of Appropriations, Allotments, Obligations, Disbursements and Balances
by Object of Expenditures (SAAODBOE) – FAR No. 1-A
This report shall be prepared by Fund Cluster and shall reflect the summary of
appropriations, allotments, obligations, disbursements and balances detailed by object of
expenditures consistent with the COA Revised Chart of Accounts per COA Circular No.
2013-002 dated January 30, 2013 and the Conversion from the Philippine Government
Chart of Accounts to the Revised Chart of Accounts, additional accounts/revised
description/title of accounts per COA Circular No. 2014-003 dated April 15, 2014. This shall
be submitted to COA and DBM within 30 days after the end of each quarter.
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

4. List of Allotments and Sub-Allotments (LASA) – FAR No. 1-B
This report shall reflect the allotments released by the DBM and the sub-
allotments issued by the Agency Central Office (ACO)/Regional Office (RO),
and their corresponding numbers, date of issuance, and amounts by allotment
class and by Fund Cluster. The total allotments per this report should be equal
to the total allotments appearing in the SAAODB (FAR No. 1). This shall be
submitted to COA and DBM within 30 days after the end of each quarter.
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

5. Statement of Approved Budget, Utilizations, Disbursements and
Balances (SABUDB) – FAR No. 2 (for Off-Budget Fund)
This report shall reflect the approved budget, utilizations, disbursements,
and balances of the agency authorized by law to use their income, such as:
OWWA/SUCs, and approved by the Board of Trustee/Regents. This shall be
submitted to COA and DBM within 30 days after the end of each quarter.
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

6. Statement of Approved Budget, Utilizations, Disbursements and Balances
by Object of Expenditures (SABUDBOE) – FAR No. 2-A (for Off-Budget Fund)
This report shall reflect the details of the approved budget, utilizations,
disbursements and balances of the agency authorized by law to use their income
presented by object of expenditures consistent with the COA Revised Chart of
Accounts. This shall be submitted to COA and DBM within 30 days after the end of
each quarter.
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

7. Aging of Due and Demandable Obligations (ADDO) – FAR No. 3
This report shall be prepared by Fund Cluster and shall reflect the
balance of unpaid obligations as indicated in the Obligation Request and
the aging of due and demandable obligations as of year-end. This shall be
submitted to COA and DBM on or before the 30 th day of the following end
of the year.
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

8. Monthly Report of Disbursements (MRD) – FAR No. 4
This report shall reflect the total disbursements made by department, office or agency and
operating unit by Fund Cluster from the following disbursement authorities:
- Notice of Cash Allocation (NCA)
- NCA for Working Fund issued by Bureau of Treasury as an advance funding from loan/grant
proceeds in favor of an agency.
- Tax Remittance Advice (TRA) issued
- Cash Disbursement Ceiling (CDC) issued by departments with foreign-based agencies or units
- Non-Cash Availment Authority (NCAA)
- Others, e.g., Customs Duties and Taxes, Bureau of Treasury Documentary Stamps.
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

8. Monthly Report of Disbursements (MRD) – FAR No. 4
This report shall track the actual disbursement of the
departments/agencies against their Disbursement Program, and the reason
for over or under spending shall be indicated. This shall be submitted to COA
and DBM on or before the 30th day of the following month covered by the
report.
REPORTING REQUIREMENTS

Budget and Financial Accountability Reports (BFARs)

9. Quarterly Report of Revenue and Other Receipts (QRROR) – FAR No. 5
This shall reflect the report on actual revenue and other receipts of the
agency/operating units for the current year presented by quarter, and by specific
sources consistent with the COA Revised Chart of Accounts. This shall be
submitted to COA and DBM within 30 days after the end of each quarter.
REPORTING REQUIREMENTS

To allow sufficient time in the consolidation of quarterly reports, the following procedures shall be observed:
•The Lower Operating Units (i.e., field offices, district offices, provincial offices)
shall be submit directly their reports to their COA Audit Team Leader and DBM
Regional Office concerned (in the case of DPWH, DOH, SUCs, DepEd, TESDA,
and CHED). However, for consolidation purposes, they shall likewise furnish their
Regional Office and Agency Central Office copies of their reports within 5 days
after the end of each quarter.
•The Regional Office shall prepare a consolidated report covering the report of the
region and its lower operating units, then submit the same to the Agency Central
Office (ACO) and COA-GAS within 10 days after the end of each quarter.
•The Agency Central Office shall prepare an overall consolidated report of the
department/agency and submit the report to the Central Office of DBM and COA-
GAS within 30 days after the end of each quarter.
Validity of Appropriations

Per National Budget Circular, the authorized appropriations shall be available for release and obligation for the specified purposes as follows:

- Personnel Services (PS) until the end of the current year.

-Maintenance and Other Operating Expenses (MOOE) and Capital Outlays (CO) until end of the following year.
-Continuing Appropriation of the previous year for MOOE and CO under RA 10633 until the end of the current year.
-Supplemental Budget for MOOE and CO Appropriation under RA 10652 until the end of the current year. The deadline for submission of Special Budget Request (SBR) for release chargeable
against this source shall be on February 13.
-All programmed Automatic Appropriations for PS, MOOE and CO shall be available for release and obligation up to the end of the current year only.
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: Personnel Services – 8%; MOOE
– 5% and Capital Outlay – 5%. The NCA received by the government agency from the DBM is net of the applicable percentage of Tax Remittance
Advice based on the Notice of Cash Allocations received.
Conduct of the Agency Performance Review
Consistent with performance-based budgeting, a quarterly evaluation of the agency performance shall be conducted by DBM
by comparing agency plans and targets per BEDs vis-à-vis actual accomplishments reflected in its BFARs. According to
National Budget Circular, departments/agencies/operating units shall regularly submit their quarterly BFARs in a timely manner
through the Unified Reporting System (URS) and the DBM shall regularly monitor their compliance with the quarterly BFARs.
COMMON FUND SYSTEM
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 Disbursement 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.
 The Department of Budget and Management (DBM), upon approval and issuance
of the General Appropriations, released the following for Agency X:

General Appropriations:
Personnel Services (PS) 600,000.00
Maintenance and Other Operating Expenses 700,000.00
Capital Outlay 1,200,000.00
Total 2,500,000.00

Allotments:
Personnel Services (PS) 550,000.00
Maintenance and Other Operating Expenses 600,000.00
ILLUSTRATION:

Capital Outlay 1,000,000.00

Total 2,150,000.00

Notice of Cash Allocations

Personnel Services (PS) 500,000.00
Maintenance and Other Operating Expenses 500,000.00
Capital Outlay 800,000.00
Total 1,800,000.00
On January 6, 2016, Agency X incurred the following:

Obligations incurred:

Personnel Services (S) 100,000.00

Maintenance and Other Operating Expenses 200,000.00

Capital Outlay 900,000.00

Total 1,200,000.00

Required: Record the above transactions in the respective registries in the books
of Agency X.
1. It is budgeting approach that uses performance information to assist in deciding where the funds will go.
A. Zero-based budgeting
B. Performance-based budgeting
C. Line-item budgeting
D. Performance-Informed budgeting

2. It is 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. Budget Execution Documents (BEDs)
C. Budget Accountability Reports (BARs)
D. Annual Cash Program (ACP)
3. In government accounting, which of the following is a capital outlay?
A. Land Improvement
B. Salaries and wages
C. Merchandise Inventory
D. Repairs and Maintenance

4. It is the system of prescribing the procedures for recording appropriations, allotments and obligations.
A. Obligation accounting
B. Government accounting
C. Budgetary accounting
D. Fund accounting
5. Which department prepares the national budget, which serves as the basis of the General Appropriations Act?
A. Judiciary Department
B. Legislative Department
C. Executive Department
D. National Government Agencies/Units

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
7. It denotes the responsibility to others that one or more persons have for their actions and behavior.
A. Accountability
B. Preparation
C. Authorization
D. Execution

8. It is the legislative authorization to make payments out of government funds under specified conditions and specific purposes.
A. Obligation
B. Allotment
C. Appropriation
D. Budgeting
9. 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. Allotment
C. Appropriation
D. Fund release

10. The budgetary accounts in government accounting is consist of the following:

A. Allotment, obligation and liquidation
B. Allotment, liquidation, and Notice of Cash Allocation
C. Appropriation, liquidation and Notice of Cash Allocation
D. Appropriation, allotment and obligation
11. 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. Allotment and Obligation Slip
B. Notice of Cash Allocation
C. Special Allotment Release Order
D. Registry of Allotment and Obligation

12. As specifically provided for in the New Constitution, no money shall be paid out of the National Treasury EXCEPT in the pursuance of
A. Appropriation
B. Allotment
C. Obligation
D. Budgeting
13. 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. Commitment
B. Obligation
C. Allotment
D. Appropriation

14. It is the legislative consideration, review and approval of the national budget.
A. Preparation
B. Authorization
C. Execution
D. Accountability
15. It is a statement of estimated receipts and estimated expenses of the government, which serves as basis for a General Appropriation Act.
A. National government budget
B. Statement of financial position
C. Statement of operations
D. Local government budget

16. Its main concern is the availability and use of funds for public services.
A. Commission on Audit
B. Department of Finance
C. Bureau of the Treasury
D. National Budget System
17. According to NBC No. 551 dated January 2, 2014, 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
B. January 31
C. November 30
D. September 30

18. It is a budget where the proposed expenditures are equal to or less than the estimated revenues.
A. Annual budget
B. Supplemental budget
C. Balanced budget
D. Line-item budget
19. It is a phase of budget cycle that starts upon the receipt of the President’s budget by the House Speaker and ends with the President’s enactment of the General Appropriations Act.
A. Budget preparation
B. Budget legislation
C. Budget execution and operation
D. Budget accountability

20. It is a budget release document that shall serve as obligational authority and will replace the Agency Budget Matrix per NBC No. 551 dated January 2, 2014.
A. General Appropriations Act Release Document (GAARD)
B. Allotment Release Program (ARP)
C. Budget Execution Documents (BEDs)
D. Budget Accountability Report (BAR)
21. 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)

22. A budget, the basis of which are the objects of expenditure.

A. Annual budget
B. Special budget
C. Line-item budget
D. Supplemental budget
23. A budget of special nature and generally submitted in special forms on account that itemizations are not adequately provided in the Appropriations Act or that the amount are not at all
included in the Appropriations Act.
A. Annual budget
B. Special budget
C. Line-item budget
D. Supplemental budget

24. This document outlines the priority areas of government activity applicable to the budget year.
A. Budget message
B. Budget proposal
C. Budget call
D. Budget calendar
25. 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