THE MANUAL ON THE

NEW GOVERNMENT ACCOUNTING SYSTEM

for National Government Agencies
(Manual Based)

ACCOUNTING POLICIES
Volume I

Table Of Contents
Page No.

Chapter 1.Introduction
Sec. 1. Objectives of the Manual
Sec. 2. Coverage
Sec. 3. Legal Basis

1
1
1

Chapter 2.Basic Features and Policies

Sec. 4. Basic Features and Policies

Chapter 3.Accounting Systems

Sec. 5. General Accounting Plan

Sec. 6. Budgetary Accounts System

Sec. 7. Budgetary Accounts

Sec. 8. Agency Budget Matrix

10

Sec. 9. Procedures for the Preparation of

ABM

10

Sec. 10. Allotment Release Order

11

Sec. 11. Recording of Allotments

11

Sec. 12. Procedures in the Monitoring and

Recording of Allotments Received
from DBM
Sec. 13. Procedures for the Recording of
Sub-Allotment Release Order
(Sub-ARO by RO/OU)
Sec. 14. Accounting for Obligation

12

Sec. 15. Procedures for the Recording of

Obligations
Sec. 16. Receipts/Income Collections and
Deposits System
Sec. 17. Sources of Income of the National
Government
Sec. 18. Methods of Accounting for Income

17

Sec. 19. Fines and Penalties

21

Sec. 20. Other Receipts

21

Sec. 21. Deposit of Collections

22

Sec. 22. Reporting of Collections and

Deposits
Sec. 23. Procedures for Collections and
Deposits Through the Collecting
Officer
Sec. 24. Procedures for Collections through
Accredited Agent Banks
Sec. 25. Dishonored Checks

23

Sec. 26. Procedures in Recording

Dishonored Checks
Sec. 27. Disbursements Defined

28

ii

14
17

20
20
21

23
26
27

30

Sec. 28. Basic Requirements for

Disbursements
Sec. 29. Disbursements System

30

Sec. 30. Certification on Disbursements

30

Sec. 31. Disbursements by Checks

31

Sec. 32. Recording of Checks Disbursements

in the Check Disbursements
Record
Sec. 33. Reporting of Checks Issued/
Released
Sec. 34. Procedures for Disbursements by
Checks
Sec. 35. Disbursements by Cash

31

Sec. 36. Cash Advances for Travel

38

Sec. 37. Procedures for Disbursements by

Cash Payment for Payroll and
Other Expenses
Sec. 38. Disbursements Through Bank
Payroll Payment
Sec. 39. Disbursements Through Petty Cash
Fund
Sec. 40. Procedures for Disbursements
Through Petty Cash Fund
Sec. 41. Purchase or Construction of
Property, Plant and Equipment
Sec. 42. Property and Inventory Accounting
System
Sec. 43. Perpetual Inventory Method

39

Sec. 44. Moving Average Method

47

Sec. 45. Procedures in the Receipt,

Inspection, Acceptance and
Recording Deliveries of

48

iii

30

31
32
38

41
42
42
46
46
47

Inventory Items and Equipment

Sec. 46. Procedures in the Requisition and
Issuance of Inventory Items
Sec. 47. Procedures in the Requisition and
Issuance of Equipment
Sec. 48. Miscellaneous Transactions

50
54
56

Sec. 49. Accounting for Loss of Cash and

Property
Sec. 50. Grant of Relief from Accountability

57

Sec. 51. Accounting for Cash Overages

58

Sec. 52. Accounting for Stale Checks

58

Sec. 53. Accounting for Disallowances

58

Sec. 54. Accounting for Overpayments

59

Sec. 55. Pro-forma Accounting Entries

59

57

Chapter 4.Trial Balances, Financial Reports and

Statements
Sec. 56. Financial Reporting System

64

Sec. 57. Trial Balance

65

Sec. 58. Purposes of the Trial Balance

65

Sec. 59. Pre-Closing Trial Balance

65

Sec. 60. Adjusting or Correcting Journal

Entries
Sec. 61. Adjustment for Accrued Items

65

Sec. 62. Asset/Revenue Adjustment

65

iv

65

Sec. 63. Liability/Expense Adjustment

66

Sec. 64. Adjustment for Deferred Items

66

Sec. 65. Asset/Expense Adjustments

66

Sec. 66. Bad Debts

66

Sec. 67. Depreciation for Property, Plant and

Equipment
Sec. 68. Method of Depreciation

67

Sec. 69. Closing Journal Entries

68

Sec. 70. Post-Closing Trial Balance

69

Sec. 71. Procedures in the Preparation and

Submission of Trial Balances and
Other Reports
Sec. 72. Generation of Financial Statements
and Supporting Schedules
Sec. 73. Responsibility for Financial
Statements
Sec. 74. Statement of Management
Responsibility for Financial
Statements
Sec. 75. Balance Sheet

70

Sec. 76. Statement of Income and Expenses

78

Sec. 77. Statement of Government Equity

78

Sec. 78. Statement of Cash Flows

78

Sec. 79. Preparation of the Statement of

Cash Flows
Sec. 80. Notes to Financial Statements

78

Sec. 81. Interim Reports

83

67

75
76
77
77

81

Sec. 82. Worksheet

83

Chapter 5.Responsibility Accounting

Sec. 83. Responsibility Accounting Defined

85

Sec. 84. Responsibility Center Defined

85

Sec. 85. Objectives of Responsibility

Accounting
Sec. 86. Concepts of Responsibility
Accounting
Sec. 87. Responsibility Center Code
Structure
Sec. 88. Computerized Accounting System

85
85
87
88

Chapter 6.Illustrative Accounting Entries

Sec. 89. Illustrative Accounting Entries in
Regular Agency (RA) Books

89

Sec. 90. Illustrative Accounting Entries in

National Government (NG)
Books

89

Appendices:
1. Table of Estimated Useful Lives

90

2. Pre-Closing Trial Balance

96

3. Post-Closing Trial Balance

99

4. Statement of Management's
Responsibility For Financial

vi

101

Statements
5. Detailed Balance Sheet

102

6. Condensed Balance Sheet

105

7. Schedule of Accounts Receivables

106

8. Schedule of Accounts Payables

107

9. Schedule of Public Infrastructures

108

10. Statement of Allotments,

Obligations and Balances
11. Detailed Statement of Income and
Expenses
12. Condensed Statement of Income and
Expenses
13. Statement of Government Equity

109

14. Statement of Cash Flows

114

15.Notes to Financial Statements

116

A.Illustrative Accounting Entries Typical transactions of

Central/Regional Offices and
Operating Units receiving NCA
direct from the DBM

121

B.Illustrative Accounting Entries Typical transactions of

Central/Regional Offices and
Operating Units receiving NCA
direct from DBM and ROs/OUs
receiving funding checks from
CO/RO
C.Illustrative Accounting Entries -

130

110
112
113

Annexes:

vii

135

Typical Transactions of Agencies

with Collections/ Income to be
recorded in the National
Government (NG) books

viii