Chapter 2 GENERAL PROVISIONS, BASIC STANDARDS AND POLICIES DOCX

Title	Chapter 2 GENERAL PROVISIONS, BASIC STANDARDS AND POLICIES
Author	Jhamae Urtola
Pages	23
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File Type	DOCX
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Summary

Chapter 2 Revenue – is the gross inflow of economic benefits or service potential during the reporting GENERAL PROVISIONS, BASIC STANDARDS AND POLICIES period when those inflows result in an increase in net assets/equity, other than increases relating Sec. 1. Scope. This chapter covers the general p...

Description

Chapter 2 GENERAL PROVISIONS, BASIC STANDARDS AND POLICIES Sec. 1. Scope. This chapter covers the general provisions from existing laws, rules and regulations; and the basic standards/fundamental accounting principles for financial reporting by national government agencies. Sec. 2. Definition of Terms. For the purpose of this Manual, the terms used as stated below shall be construed to mean as follows: Accrual basis – means a basis of accounting under which transactions and other events are recognized when they occur (and not only when cash or its equivalent is received or paid). Therefore, the transactions and events are recognized in the accounting records and recognized in the financial statements of the periods to which they relate. The elements recognized under accrual accounting are assets, liabilities, net assets/equity, revenue, and expenses. Assets – are resources controlled by an entity as a result of past events, and from which future economic benefits or service potential are expected to flow to the entity. Contributions from owners – means future economic benefits or service potential that have been contributed to the entity by parties external to the entity, other than those that result in liabilities of the entity, that establish a financial interest in the net assets/equity of the entity, which: conveys entitlement both to (i) distributions of future economic benefits or service potential by the entity during its life, such distributions being at the discretion of the owners or their representatives; and to (ii) distributions of any excess of assets over liabilities in the event of the entity being wound up; and/or can be sold, exchanged, transferred, or redeemed. Distributions to owners – means future economic benefits or service potential distributed by the entity to all or some of its owners, either as a return on investment or as a return of investment. Entity – refers to a government agency, department or operating/field unit. It may be referred to in this GAM as an agency. Expenses – are decreases in economic benefits or service potential during the reporting period in the form of outflows or consumption of assets or incurrence of liabilities that result in decreases in net assets/equity, other than those relating to distributions to owners. 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. (Sec. 109, Presidential Decree (P.D.) No. 1445) Government Budget – is the financial plan of a government for a given period, usually for a fiscal year, which shows what its resources are, and how they will be generated and used over the fiscal period. The budget is the government's key instrument for promoting its socio- economic objectives. The government budget also refers to the income, expenditures and sources of borrowings of the National Government (NG) that are used to achieve national objectives, strategies and programs. Liabilities – are firm obligations of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits or service potential. Net assets/equity – is the residual interest in the assets of the entity after deducting all its liabilities. Revenue – is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets/equity, other than increases relating to contributions from owners. Revenue funds – comprise all funds derived from the income of any agency of the government and available for appropriation or expenditure in accordance with law. (Section 3, P.D. No. 1445) Sec. 3. Responsibility, Accountability and Liability over Government Funds and Property Responsibility over Government Funds and Property 1.It is the declared policy of the State that all resources of the government shall be managed, expended or utilized in accordance with laws and regulations, and safeguarded against loss or wastage through illegal or improper disposition, with a view to ensuring efficiency, economy and effectiveness in the operations of government. The responsibility to take care that such policy is faithfully adhered to rests directly with the chief or head of the government agency concerned. (Sec. 2, P.D. No. 1445) 2.Fiscal responsibility shall, to the greatest extent, be shared by all those exercising authority over the financial affairs, transactions, and operations of the government agency. (Sec. 4(4), P.D. No. 1445) 3.The head of any agency of the government is immediately and primarily responsible for all government funds and property pertaining to his agency. Persons entrusted with the possession or custody of the funds or property under the agency head shall be immediately responsible to him, without prejudice to the liability of either party to the government. (Sec. 102, P.D. No. 1445) Accountability over Government Funds and Property 1.Every officer of any government agency whose duties permit or require the possession or custody of government funds or property shall be accountable therefor and for the safekeeping thereof in conformity with law. Every AO shall be properly bonded in accordance with law. (Sec. 101, P.D. No. 1445; Section 50, Chapter 9, Subtitle B, Book V, Executive Order (E.O.) No. 292) 2.Transfer of government funds from one officer to another shall, except as allowed by law or regulation, be made only upon prior direction or authorization of the Commission or its representative. (Sec. 75, P.D. No. 1445) 3. When government funds or property are transferred from one AO to another, or from an outgoing officer to his successor, it shall be done upon properly itemized invoice and receipt which shall invariably support the clearance to be issued to the relieved or outgoing officer, subject to regulations of the Commission. (Sec. 77, P.D. No. 1445) Liability over Government Funds and Property 1.Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor. (Sec. 103, P.D. No. 1445) 2.Every officer accountable for government funds shall be liable for all losses resulting from the unlawful deposit, use, or application thereof and for all losses attributable to negligence in the keeping of the funds. (Sec. 105(2), P.D. No. 1445) 3.No AO shall be relieved from liability by reason of his having acted under the direction of a superior officer in paying out, applying, or disposing of the funds or property with which he is chargeable, unless prior to that act, he notified the superior officer in writing of the illegality of the payment, application, or disposition. The officer directing any illegal payment or disposition of the funds or property shall be primarily liable for the loss, while the AO who fails to serve the required notice shall be secondarily liable. (Sec. 106, P.D. No. 1445) 4.When a loss of government funds or property occurs while they are in transit or the loss is caused by fire, theft, or other casualty or force majeure, the officer accountable therefor or having custody thereof shall immediately notify the Commission or the auditor concerned and, within 30 days or such longer period as the Commission or auditor may in the particular case allow, shall present his application for relief, with the available supporting evidence. Whenever warranted by the evidence, credit for the loss shall be allowed. An officer who fails...

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