C1: Overview of Government Accounting

Government accounting

encompasses the process of analyzing, recording, classifying, summarizing and communicating all transactions involving the receipt and disposition of government funds and property, and interpreting the results thereof

Objectives of Government Accounting

• To produce information concerning past operations and present conditions;

• To provide a basis for guidance for future operations;

• To provide for control of the acts of public bodies and officers in the receipt, disposition and utilization of funds and property; and

• To report on the financial position and the results of operations of government agencies for the information of all persons concerned

Greater Emphasis of Government Accounting

• Sources and utilization of government funds; and

• Responsibility, accountability and liability of entities entrusted with government funds and properties

Sources of Government Funds

includes receipts from taxes and other fees, borrowings, and grants from other governments and international bodies

Utilization of Government Funds

includes expenditures on programs, projects, unanticipated losses from calamities and the like

Head of a Government Agency

is directly responsible in implementing this policy and is primarily responsible for government resources entrusted to his agency

Share fiscal responsibility

All those who are exercising authority over a government agency shall _____________

Government officer entrusted with the possession of government resources

• is responsible for the safekeeping therefor in accordance with the law.

• Every accountable officer shall be properly bonded

Authorization of the COA

The transfer of government funds from one officer to another shall (except as allowed by law) be made only after the _______________

Invoice, Receipt

The transfer of government funds shall be properly documented in an ____ and ______

Employee found to be directly responsible

The unlawful use of government resources shall be the personal liability of the ___________

Accountable Officer

Every _________ shall be liable for all losses resulting from the unlawful use or negligence in the safekeeping of government resources

Notified the superior officer, in writing

No accountable officer shall be relieved from liability merely because he has acted under the direction of a superior officer in unlawfully utilizing the government resources entrusted to him

• Unless before that act, he has _________, ____ that the utlization is illegal

30 days

An accountable officer shall immediately notify the COA for any loss of government funds from unforeseen events (force majeure) within _______. Failure to do so will not relieve the officer of liability

Offices with Government Accounting Responsibility

• Commission on Audit (COA)

• Department of Budget and Management (DBM)

• Bureau of Treasury (BTr)

• Government agencies

Commission on Audit

• Has the exclusive authority to promulgate accounting and auditing rules and regulations

• Keeps the general accounts of the government, supporting vouchers, and other documents

• Submits financial reports to the President and Congress

Department of Budget and Management

is responsible for the formulation and implementation of the national budget with the goal of attaining the nation’s socio-economic objectives

Bureau of Treasury

functions under the Department of Finance and is the cash custodian of the government

Bureau of Treasury

is authorized to:

• Receive and keep national funds and manage and control the disbursements

• Maintain accounts of financial transactions of all national government offices, agencies and instrumentalities

Government agency

refers to any department, bureau or office of the national government, or any of its branches and instrumentalities, or any political subdivision, as well as any government owned or controlled corporation (GOCC), including its subsidiaries, or other self-governing board or commission of the government

Government agency

is responsible in directly implementing the projects of, and performing the functions delegated by, the government

Accounting books and Budget registries

Each government agency (entity) shall maintain ____________ which are reconciled with the cash records of the BTr and the budget records of the COA and DBM

Government agency

is required by law to have accounting units/divisions/departments

Entity

refers to a government agency, department or operating/field unit

Financial Reporting

is the process of preparation, presentation and submission of general purpose financial statements and other reports

Old Government Accounting System

An ___________ had been used for about 5 decades before it was replaced by New Accounting System (NGAs) in 2002

January 1, 2016

On _____________, the NGAs was replaced by the Government Accounting Manual for National Government Agencies (GAM for NGAs)

GAM for NGAs

was promulgated to harmonize the government accounting standards with international accounting standards, particularly the IPSAS

International Public Sector Accounting Standards

IPSAS stands for __________

International Financial Reporting Standards

The IPSASs are based on the ___________________

Philippine Public Sector Accounting Standards

The Philippine Government has adopted the IPSAS through the _________________

GAM for NGAs

The provision fo the PPSAS are incorporated in the ________

GAM for NGAs

is promulgated by the Commission on Audit (COA) based on the authority conferred to it by the Philippine Constitution

Coverage of GAM for NGAs

It provides the basic concepts to be used in:

• Preparing general purpose financial statements in accordance with the PPSAS and other financial reports as may be required by laws, rules, and regulations

• Reporting of budget, revenue and expenditure in accordance with laws, rules, and regulations

Objective of the GAM for NGAs

Aims to update the following:

• Standards, policies, guidelines and procedures in accounting for government funds and property

• Coding structure and accounts

• Accounting books, registries, records, forms, reports and financial statements

Basic Accounting and Budget Reporting Principles

• Philippine Public Sector Accounting Standards

• Accrual basis of accounting

• Budget basis for presentation of budget information in the financial statements

• Revised Chart of Accounts prescribed by COA

• Double entry bookkeeping

• Financial statements based on accounting and budgetary records

• Fund cluster accounting

Fund cluster

The books of accounts are maintained by _____ (i.e., according to the types of funds being accounted for)

01

Code for Regular Agency Fund

02

Code for Foreign Assisted projects Fund

03

Code for Special Account-Locally Funded/Domestic Grants Fund

04

Code for Special Account-Foreign Assisted/Foreign Grants Fund

05

Code for Internally Generated Funds

06

Code for Business Related FUnds

07

Code for Trust Receipts

Qualitative Characteristics of Financial Reporting

• Understandability

• Relevance

• Materiality

• Timeliness

• Reliability

• Faithful representation

• Substance over form

• Neutrality

• Prudence

• Completeness

• Comparability

Understandability

• When users can reasonably be expected to comprehend the meaning of the information

• Information about complex matters is not excluded simply because it may be too difficult for certain users to understand

Understandability

Accordingly, users are assumed to have

• reasonable knowledge of the entity’s activities

• willingness to study the information

Relevance

• If it can assist users in evaluating past, present, or future events or in confirming or correcting past evaluations.

• Information must also be timely

Timeliness

• Information loses its relevance if there is undue delay in its reporting.

• The complexity of an entity’s operations is not a sufficient reason for failing to report on a timely basis

Reliability

• Information is free from material error and bias, and can be depended on by users to represent faithfully that which it purports to represent or could reasonably be expected to represent

Faithful representation

• It should be presented in accordance with the substance of the transactions and other events, and not merely their legal form