Revenue Fundamental principle standards sources PDF

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FUNDAMENTAL PRINCIPLE OF REVENUEAll revenues accruing to the NGAs shall be governed by the following fundamental principles:a. Unless otherwise specifically provided by law, all revenues accruing to an entity by virtue of the provisions of existing law, orders and regulations shall be deposited/ rem...

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FUNDAMENTAL PRINCIPLE OF REVENUE All revenues accruing to the NGAs shall be governed by the following fundamental principles: a. Unless otherwise specifically provided by law, all revenues accruing to an entity by virtue of the provisions of existing law, orders and regulations shall be deposited/remitted in the National Treasury (NT) or in any duly authorized government depository, and shall accrue to the General Fund (GF) of the NG. b. Except as may otherwise be specifically provided by law or competent authority, all moneys and property officially received by a public officer in any capacity or upon any occasion must be accounted for as government funds and government property. c. Amounts received in trust and from business-type activities of government may be separately recorded and disbursed in accordance with such rules and regulations as may be determined by a Permanent Committee composed of the Secretary of Finance as Chairman, and the Secretary of Budget and Management and the Chairman, COA, as members. d. Receipts shall be recorded as revenue of Special, Fiduciary or Trust Funds or Funds other than the GF, only when authorized by law as implemented by rules and regulations issued by the Permanent Committee. e. No payment of any nature shall be received by a collecting officer without immediately issuing an official receipt in acknowledgement thereof. The receipt may be in the form of postage, internal revenue or documentary stamps and the like, officially numbered receipts, subject to proper custody, accountability, and audit. f. Where mechanical devices (e.g. electronic official receipt) are used to acknowledge cash receipts, the COA may approve, upon request, exemption from the use of accountable forms. g. At no instance shall temporary receipts be issued to acknowledge the receipt of public funds. h. Pre-numbered ORs shall be issued in strict numerical sequence. All copies of each receipt shall be exact copies or carbon reproduction in all respects of the original. i. An officer charged with the collection of revenue or the receiving of moneys payable to the government shall accept payment for taxes, dues or other indebtedness to the government in the form of checks issued in payment of government obligations, upon proper endorsement and identification of the payee or endorsee. Checks drawn in favor of the government in payment of any such indebtedness shall likewise be accepted by the officer concerned. At no instance should money in the hands of the CO be utilized for the purpose of cashing private checks. j. Under such rules and regulations as the COA and the Department of Finance (DOF) may prescribe, the Treasurer of the Philippines and all AGDB shall

acknowledge receipt of all funds received by them, the acknowledgement bearing the date of actual remittance or deposit and indicating from whom and on what account it was received. (Sec. 70, P.D. 1445)

ACCOUNTING STANDARD FOR REVENUE Measurement of revenue Revenue should be measured at the fair value of the consideration received or receivable. An exchange for goods or services of a similar nature and value is not regarded as a transaction that generates revenue. However, exchanges for dissimilar items are regarded as generating revenue. If the inflow of cash or cash equivalents is deferred, the fair value of the consideration receivable is less than the nominal amount of cash and cash equivalents to be received, and discounting is appropriate. This would occur, for instance, if the seller is providing interest-free credit to the buyer or is charging a below-market rate of interest. Interest must be imputed based on market rates. Recognition of revenue Recognition, as defined in the IASB Framework, means incorporating an item that meets the definition of revenue (above) in the income statement when it meets the following criteria:  it is probable that any future economic benefit associated with the item of revenue will flow to the entity, and  the amount of revenue can be measured with reliability ACCOUNTING STANDARD FOR REVENUE RECOGNITION Revenue recognition is a generally accepted accounting principle (GAAP) that stipulates how and when revenue is to be recognized. The revenue recognition principle using accrual accounting requires that revenues are recognized when realized and earned–not when cash is received

SOURCES OF REVENUE A) Exchange transactions (Reciprocal transfers) – one entity either receives assets or services, or has liabilities extinguished, and directly gives approximately equal value to another entity in exchange 1) Sale of Goods/ Provisions of Services to 3rd parties or other government entities a) Service Income b) Business Income 2) Used by other entity assets yielding interest, royalties and dividends or similar distributions a) Interest income b) Royalties c) Dividends B) Non-exchange transactions (Non-reciprocal transfers) – an entity receives value from another entity either receives value from another entity which without directly giving approximately equal value in exchange or gives value to another entity without directly receiving approximately equal value in exchange 1) Taxes – compulsory payments intended to provide revenue to the government a) Income tax b) Value added tax c) Goods and services tax d) Customs duty e) Death duty f) Property tax 2) Fines and penalties – monetary sanctions received as consequence of breach of laws 3) Gift, Donations and Goods/Services In-kind – voluntary transfers of assets and services that one entity makes to another, normally free from stipulations SOURCES OF OTHER RECEIPTS A) Receipt of subsidy from the National Government 1) Notice of Cash Allocation (NCA) 2) Tax Remittance Advice (TRA) 3) Non-cash Availment Authority

4) Cash Disbursement Ceiling B) Receipt of subsidy or assistance from other government agencies including LGUs and GOCCs C) Receipt of excess cash advance granted to officers and employees D) Receipt of refund or overpayment of expenses E) Receipt of performance bond or security deposit F) Collections made in behalf of another entity G) Intra-agency and Inter-agency fund transfers

GOVERNMENT AGENCIES VS PROFIT ENTITIES: ACCOUNTING DIFFERENCES...