Chapter 1 Overview of Govt PDF

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Chapter 1 - Overview of Government AccountingGovernment Accounting and Accounting for Non-Profit Organizations By: Zeus Vernon B. MillanGovernment accounting- encompasses the processes of analyzing, recording, classifying, summarizing and communicating all transactions involving the receipt and disp...

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Chapter 1 - Overview of Government Accounting Government Accounting and Accounting for Non-Profit Organizations By: Zeus Vernon B. Millan Government accounting- encompasses the processes of analyzing, recording, classifying, summarizing and communicating all transactions involving the receipt and disposition of government funds and property, and interpreting the results thereof.” (State Audit Code of the Philippines, P.D. No. 1445, Sec. 109) Government Accounting Objectives ❑ 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. Government Accounting vs. Business Accounting Compared to the accounting for business entities, government accounting places greater emphasis on the following: ❑ Sources and utilization of government funds; and ❑ Responsibility, accountability and liability of entities entrusted with government funds and properties. Responsibility over Government Funds and Property o

Government resources must be utilized efficiently and effectively in accordance with the law.

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The head of a government agency is directly responsible in implementing this policy.

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All other personnel entrusted with the custody of government resources are responsible to the head of the government agency, are accountable for the safeguarding thereof, and are liable for any losses.

Accountability over Government Funds and Properties o

Government officer entrusted with the possession of government resources is responsible for the safekeeping therefor in accordance with the law.

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Every accountable officer shall be properly bonded.

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Transfer of government funds from one officer to another shall, except as allowed by law, be made only after the authorization of the COA. Transfer shall be properly documented in an invoice and receipt

Liability over Government Funds and Properties ➢ Unlawful use and losses resulting from the unlawful use or negligence in safekeeping of government resources shall be the personal liability of the employee or accountable officer found to be directly responsible therefor. ➢ An accountable officer shall immediately notify COA for any loss of government funds from unforeseen events or force majeure within 30 days. Failure to do so will not relieve the officer of liability. ➢ 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 notified the superior officer, in writing, that the utilization is illegal. ➢ The superior officer shall be primarily liable while the accountable officer who fails to serve the required notice shall be secondarily liable. Accounting responsibility The following offices are charged with government accounting responsibilit y: 1. Commission on Audit (COA)- Promulgate accounting and auditing rules, keep the general accounts and submit financial reports to Congress/President 2. Department of Budget and Management (DBM)- Formulation & Implementation of the national budget 3. Bureau of Treasury (BTr)- Cash custody and control of disbursements 4. Government agencies-Maintain accounting books and budget registries which are reconciled with the cash records of the BTr and the budget records of the COA and DBM.

Bureau of Treasury (BTr)

Each entity reconciles accounting books with cash records of BTr

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Government Agencies Each entity reconciles budget registries with budget records of DBM Department of Budget and Management (DBM)

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Each entity’s accounting books are subject to audit by COA. Each entity reconciles budget registries with budget records of COA; Each entity submits financial reports to COA for consolidation

Commission on Audit (COA)

Financial Reporting ❑ Process of preparation, presentation and submission of general purpose financial statements and other reports. The objective is to provide information about the entity that is useful to users for accountability purposes and decision-making The GAM for NGAs The Government Accounting Manual for National Government Agencies (GAM for NGAs) is promulgated by the COA under the authority conferred to it by the Philippine Constitution. The GAM for NGAs was promulgated primarily to harmonize the government accounting standards with the International Public Sector Accounting Standards (IPSAS). The IPSASs are based on the IFRSs. Objectives of the GAM for NGAs To update the following: ❑ Standards, policies, guidelines and procedures in accounting for government funds and property; ❑ Coding structure and accounts; and ❑ Accounting books, registries, records, forms, reports and financial statements. Basic Accounting and Budget reporting Principles • • • • • • •

Compliance with PPSAS and relevant laws, rules and regulations 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 Clusters

Qualitative Characteristics of Financial Reporting • • • • • • • • • • •

Understandability Relevance Materiality Timeliness Reliability Faithful representation Substance over form Neutrality Prudence Completeness Comparability

Components of General Purpose Financial Statements 1. 2. 3. 4. 5. 6.

Statement of Financial Position; Statement of Financial Performance; Statement of Changes in Net Assets/Equity; Statement of Cash Flows; Statement of Comparison of Budget and Actual Amounts; and Notes to the Financial Statements

Elements of Financial Statements ❑ ❑ ❑ ❑ ❑

Assets Liabilities Equity Revenue Expenses

Recognition of an Asset An item is recognized as asset if it meets all of the following criteria: (1) It meets the definition of an asset; (2) Probable inflow of future economic benefits; and (3) Reliable measurement of cost or other value (e.g., fair value)....