Chapter 01 Overview OF Government Accounting PDF

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CHAPTER 1OVERVIEW OF GOVERNMENT ACCOUNTINGGovernment 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.The objectives of...

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CHAPTER 1 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.

The objectives of government accounting are: 1. To produce information concerning past operations and present conditions; 2. To provide a basis for guidance for future operations; 3. To provide for control of the acts of public bodies and officers in the receipt, disposition, and utilization of funds and property; and 4. To report on the financial position and the result of operations of government agencies for the information of all persons concerned.

**************************************************************************************************** Like the accounting of business entities, government accounting is also a process of producing information that is useful in making economic decisions.

Government accounting, however, places greater emphasis on the following: 1. Sources and utilization of government funds; and 2. Responsibility, accountability, and liability of entities entrusted with government funds and properties.

Sources of government funds include:

1. receipts from taxes and other fees 2. borrowings 3. grants from other governments and international bodies

Utilization of government funds include: 1. expenditures on programs, projects, unanticipated losses from calamities and the like.

Responsibility over Government Funds and Property 1.The head of a government agency - is directly responsible in implementing policies - is primarily responsible for government resources entrusted to his agency

2. All those who are exercising authority over a government agency shall share fiscal responsibility.

**************************************************************************************************** The following offices are charged with government accounting responsibility:

1. Commission on Audit (COA) - 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.

2. Department of Budget and Management (DBM) - is responsible for the formulation and implementation of the national budget with the goal of attaining the nation’s socio-economic objectives.

3. Bureau of Treasury (BTr) - functions under Department of Finance - is cash custodian of the government - is authorized to received and keep national funds and manage and control the disbursement thereof - is authorized to maintain accounts of financial transactions of all national government offices, agencies, and instrumentalities.

4. Government Agencies - are responsible in directly implementing the projects of, and performing the functions delegated by, the government - shall maintain accounting books and budget registries - are required by law to have accounting units/division/department.



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.

**************************************************************************************************** The GAM for NGAs An “old” government accounting system had been used for about five decades before it was replaced by the New Government Accounting System (NGAS) in 2002.

However, on 01 January 2016, the NGAS was replaced by the Government Accounting Manual for National Government Agencies (GAM for NGAs).

The GAM for NGAs was promulgated primarily to harmonize the government accounting standards with international accounting standards, particularly the International Public Sector Accounting Standards (IPSAS). The IPSASs are based on the International Financial Reporting Standards (IFRS).

The Philippine Government has adopted the IPSAS through Philippines Public Sector Accounting Standards (PPSAS). The provisions of the PPSAS are incorporated in the GAM for NGAs.

Legal Basis of GAM for NGAs

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

The GAM for NGAs provides the basis concept to be used in: 1.

Preparing

general

purpose

financial

statements in accordance with the PPSAS and

other financial reports as may be required by laws, rules and regulations; and 2.

Reporting

of

budget,

revenue,

and

expenditure in accordance with laws, rules, and regulations Objective of GAM for NGAs

The GAM for NGAs aims to update the following: 1.

Standards,

policies,

guidelines,

and

procedures in accounting for government funds and property; 2. Coding structure and accounts; and 3. Accounting books, registries, records, forms, reports, and financial statements. **************************************************************************************************** Basic Accounting and Budget Reporting Principles The financial records and reports of government entities shall comply with the following: 1. Philippine Public Sector Accounting Standards (PPSAS) and relevant laws, rules, and regulations; 2. Accrual basis of accounting; Under accrual basis of accounting, transactions are recognized when they occur (and not only when cash is received or paid). Therefore, transactions are recognized in the periods to which they relate.

3. Budget basis for presentation of budget information in the financial statements; 4. Revised Chart of Accounts prescribed by COA; 5. Double entry bookkeeping; 6. Financial statements based on accounting and budgetary records; 7. Fund cluster accounting

The books of accounts are maintained by fund cluster (i.e., according to the types of funds being accounted for) as follows:

Code 01 02 03 04 05 06 07

Fund Cluster Regular Agency Fund Foreign Assisted Projects Fund Special Account-Locally Funded/ Domestic Grants Fund Special Account-Foreign Assisted/ Foreign Grants Fund Internally Generated Funds Business Related Funds Trust Receipt

For example, separate accounting books (Journals and Ledger) and budget registries shall be maintained for Regular Agency Fund. Another separate accounting books and budget registries shall be maintained for Foreign Assisted Project Funds, and so on. **************************************************************************************************** Components of General-Purpose Financial Statements General-Purpose Financial Statements are those intended to meet the needs of users who are not in a position to demand reports tailored to meet their particular information needs.

The complete set of general-purpose financial statements consists of: 1. Statement of Financial Position 2. Statement of Financial Performance 3. Statement of Changes in Net Assets/ Equity 4. Statement of Cash Flows 5. Statement of Comparison of Budget and Actual Amounts 6. Notes to the Financial Statements, comprising a summary of significant accounting policies and other explanatory notes....