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1 N AT U R E A N D S C O P E O F N G A S | 1
CH. 1 NATURE AND SCOPE OF THE NGAS
Old GAS manual accounting system;
complex; tedious.
Article IX-D of 1987 Constitution Section
2(2) grants the Commission on Audit
(COA) to exercise authority on developing
New Government Accounting System
(NGAS) that will generate financial reports
that reflect a more realistic picture of Govt
operations.
NGAS a simplified set of accounting
concepts, guidelines and procedures
designed to ensure correct, complete and
timely recording of government financial
transactions, and production of accurate
and relevant financial reports.
NGAS Objective:
1) Adoption of a system in conformity with
International Accounting Standards
2) Pursuit of eventual computerization
3) Generation of relevant and periodic FS
4) Effective and efficient in monitoring of
agency perf.
Government Accounting Section 109 of PD
1445 encompasses the process of
analyzing, recording, classifying,
summarizing, and communicating
transactions involving the receipt and
disposition of government fund and
property and interpreting the result thereof.
Section 110 of PD 1445 Objectives of
Govt accounting
1. Produce information about
operations and present conditions
facilitate agency performance
evaluation rom one period to another
2. Provide a basis of guidance for future
operations as a result performance
evaluation in Obj#1
3. Provide a basis of control in the receipt,
disposition and utilization of funds and
property Public officers
accountable for resources entrusted to
them
4. Report on the financial position and
result of operations of government
agencies accounting data will show
obligations incurred; inflow and outflow
of resources; does it need additional
resources?
Achieving Obj #1 of NGAS
o COA is a member of International
Organization of Supreme Audit
Institutions (INTOSAI) which encourages
members to adopt relevant international
accounting standards
o Public Sector Accounting Standards
Board (PSASB) created under COA
resolution 2008-12 as a response to
formulate and implementing a
nationalized standard, Public Sector
Accounting Standards (PPSAS).
o Process in developing the PPSAS
1. Applicability of IPSAS applicability
to Philippine setting
2. Exposure draft of IPSAS PSASB
issues exposure drafts for comments
of interested parties and evaluates
all comments received and makes
modifications where appropriate.
3. Fundamental issues if an
accounting principle is in conflict with
Philippine laws/rules/regulations, this
principle may be changed to suit
local scenario.
4. Statutory authority If international
standard deviates from Philippine
law/regulation, Philippine application
guidance shall be issued accordingly
all
5. Disclosure requirements may be
amended to improve fair
presentation of the matter
6. PPSAS numbering PPSAS is
assigned same name as IPSAS. If
theres no IPSAS equivalent, PPSAS
past
will be assigned a number starting
with 101.
7. Financial reporting issues not dealt
with IPSAS researches and
discussion document will be prepared
based on other relevant accounting
standards not in conflict with
Philippine laws
8. Submission of draft to PSASB for
are
consideration of COA PSASB may
decide to re-expose an unresolved
issue of PPSAS
9. When appropriate, focused group
discussions will be held to obtain
further opinions on issues on
exposure process.
Accounting responsibility The Constitution
of the Philippines mandates the keeping of
the general accounts of the government,
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promulgation of accounting rules, and o It controls and monitors

submission of reports covering the financial appropriations and allotments thru
condition and operation of the government the use of the following registries:
Offices charged with accounting a. Registry of Appropriations and
responsibility Allotments (RAPAL)
1) Commission on Audit (COA) b. Registry of Special Purpose Fund
o Keeps the general accounts of the Appropriation (RESFPA)
govt, promulgates accounting rules c. Registry of Allotments and Notice
and regulations, and submits to the of Cash Allocation (RANCA)
President and Congress an annual o For UACS, it will handle the validation
report of govt agencies and units and assignment of new codes for
(DL Sep 30 each year) funding source allocation, sub-object
o Article IX-D, Section (2) The codes for expenditure items.
Commission on Audit shall have 3) Bureau of Treasury (BTr)
exclusive authority to define the o Receive and keep national funds,
scope of its audit and examination, manage and control disbursements
establish techniques and methods thereof
required therefor, and promulgate o Maintain accounts of financial
accounting and auditing rules and transactions of all national
regulations, including those for the government offices, agencies, and
prevention and disallowance of instrumentalities.
irregular, unnecessary, excessive, o Registries maintained:
extravagant, or unconscionable a. Registry of NCA and
expenditures, or uses of government Replenishments (RENREP)
funds and properties. control and monitoring of bank
o Shall be responsible for UACS, transfers as per MDS
Revised chart of accounts as per b. Bank transfer in replenishing MDS
COA-DBM-DOF Joint Circular # 2013- accounts
1 o For UACS, it shall be responsible for
o PPSAS shall apply to all National the consistency of accounts
Govt agencies (NGAs), LGUs, GOCCs classification and coding standards
not considered Government Business with the Government Finance
Enterprises (GBE). Statistics (GFS)
o Government Business Enterprise 4) Government Agencies
(GBE) an entity that has the power o Includes departments, bureaus,
to contract in its own name; has offices and other instrumentalities of
financial and operational authority to the National Government.
carry on a business; sells goods and o Mandated to journalize the Notice of
services in the normal course of Cash Allocation (NCA) it receives
business to other entities for profit or o Maintains the following registries:
full cost recovery; not reliant on a. Registry and Allotments and
continuing government funding; and Obligations Personnel Services
controlled by a public sector entity. It b. Registry of Allotment and
follows PFRS and other standards Obligations Maintenance and
issued by PRSC, BOA, and PRC. Other Operating Expenses
2) Department of Budget and Management (RAOMO)
(DBM) c. Registry of Allotments and
o Responsible for the formulation and Obligations Capital Outlay
implementation of National Budget; (RAOCO)
efficient and sound utilization of d. Registry of Allotments and
government funds and revenues Obligations Financial Expenses
(RAOFE)
Basic Features and Policies of NGAS
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o Accounting Methods
IPSASB advocates adoption of PPSAS,
which were based from IPSAS that
was based from IFRS.
Accrual basis of accounting system
record transactions when they occur
o One Fund Concept
All income accruing to the agencies
shall accrue to the General Fund of
the government; and all money
collected on any tax levied for
special purpose shall be treated as a
Special Fund.
Special Purpose Fund required by
law or by a donor agency. Examples:
a. Miscellaneous Personnel Fund
cover personnel benefits not
provided in regular budget
b. Calamity Fund
c. Organizational Adjustment Fund
cover budgetary requirements of
a newly created organization,
program/project/activity within an
agency
o Chart of Accounts and Account Codes
IPSAS acknowledges the right of
governments and national standards-
setter to establish their respective
accounting standards and guidelines
for financial reporting in their
jurisdictions.
DBM, COA, DOF, BTr jointly
developed Unified Accounts Code
Structure (UACS) which shall be the
coding framework of the National
Governments financial transactions
in all phases of the budget cycle.
Implemented at start of 2014.
o Responsibility Accounting
A system that measures the plans
(by budget) and actions (by actual
results) of each responsibility center.
Done by computerized accounting
system.
Responsibility Center a part,
segment, unit or function of a
government agency who is
accountable for a specified set of
activities.
Objectives:
a. Ensure that all costs and revenues
are properly charged/credited to
the correct responsibility center.
Deviations can be attributed to
managers
b. Provide a decision basis for future
operations
c. Facilitate review activities to
monitor the performance of each
responsibility center and
evaluation of agencys operations
Concepts:
a. Controllable cost manager has
the power to incur it within a
given period of time. Fewer
costs are controllable as one
moves down to lower level of
management responsibility
due to decreasing authority
b. Non-controllable cost incurred
indirectly and allocated to a
responsibility level
o Books of Accounts
Journal Entry Voucher (JEV) basis for
recording in the journals; General
Journal
Special Journals:
a. Cash Receipts Journal
b. Check Disbursement Journal
c. Cash Disbursement Journal
NGAS set of accounting books for
NGAs:
a. Regular Agency (RA) books
records the receipt and utilization
of NCA and other income/receipts
which agencies are authorized to
use and to deposit with
Authorized Government
Depository Bank (AGDB) and
National Treasury.
b. National Government (NG) Books
used to record income which
agencies are not authorized to
use and are required to be
remitted to the National Treasury.
Now discontinued. Replaced by
books per fund.
o Financial Statements
Statement of Financial Position
shows the financial condition of
agency at certain date
Statement of Changes in Equity
shows the financial transactions
which resulted to the surplus/deficit
account of equity at year end
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Statement of Financial Performance
shows the results
operation/performance of the agency
at the end of a particular period.
Statement of Cash Flows
summarizes all cash activities of an
agency (operating, financing,
investing activities)
Presentation of Comparison
Budget and Actual Amounts
Notes summary of significant
accounting policies and explanatory
notes
o Two-Money Column Trial Balance
Similar to commercial accounting
Veered away from old four-money
column for simplicity (Debit Balance,
Debit Totals, Credit Balance, Credit
Totals)
o Allotment and Obligation
Allotment authorization issued by
DBM to an agency to enable them to
incur obligation up to a specified
amount that is within a legislative
appropriation
Obligation refers to the
commitment by an agency arising
from an act which binds the agency
to the eventual payment of a sum of
money. Maintained by registries:
RAOCO, RAOMO, RAOPS, RAOFE.
o Notice of Cash Allocation (NCA)
Authorization issued by DBM to an
agency/unit to withdraw cash from
the National Treasury through
issuance of Modified Disbursement
System (MDS) checks or other
authorized mode of disbursements.
Entry:
Cash-MDS, Regular XXX
Due to BIR XXX
Subsidy from the National Govt
XXX
o Financial Expenses
Bank charges, interest expenses,
commitment charges, doc stamps
expense are now separately
classified from MOOE
Perpetual Inventory of Supplies and
materials supplies and materials
are inventories
o Perpetual Inventory of Supplies and
materials
Perpetual inventory method, and
of inventory control account is
maintained in GL on current basis
Purchases from PCF shall be charged
- immediately to expense accounts for
regular purchases
Moving average method of costing
shall be used for costing inventories
of o Maintenance of Supplies and PPE Ledger
cards
Supplies stock cards maintained by
stock #
PPE Ledger cards by category of PPE
o Construction of Assets
Construction Period Theory shall be
applied for costing. Bonus paid to
contractor for early completion shall
be added to the total cost. Damages
charged/paid by contractor shall be
deducted from total cost of the
project. Expenses incurred such as
taxes, interests, and fees shall be
capitalized. Those incurred after
construction shall be part of
operating costs.
o Registry of Public
Infrastructures/Registry of Reforestation
Projects
A registry of public infrastructures
shall be maintained for each
classification of projects. Examples:
a. Registry of Public Infrastructures
Bridges (RPIB)
b. Registry of Public Infrastructures
Roads (RPIR)
c. Registry of Public Infrastructures
Parks (RPIP)
Schedule of public
infrastructures/reforestation projects
shall be included in Notes to FS
o Depreciation
PPSAS 17 periodic depreciation
charge shall be recognized in surplus
or deficit, unless it is included in the
carrying amount of another asset.
Depreciation is recognized even if FV
of asset exceed its carrying amount,
as long as the RV does not exceed its
carrying amount.
Example. The depreciated amount of
Plant and equipment used to
manufacture a product, where it is
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included in the cost of converting
that product.
Residual value and useful life at each
reporting date. If expectations differ
from previous estimates, the
change/s shall be accounted for as
change in accounting estimate to be
treated currently and prospectively.
Useful life expected utility to the
entity; determined by judgment by:
a. Expected usage capacity/output
b. Expected physical wear and tear
operational factors and repair and
maintenance
c. Technical or commercial
obsolescence changes or
improvements in production
d. Legal or similar limits on the
usage ex. Expiry dates.
Depreciation methods SYD, SL,
DDM, units of production; the entity
may select the method most closely
reflects the expected pattern of
consumption of future economic
benefits and is applied consistently
from period to period.
For uniformity COA released Circular
2003-007 to unify useful life
estimates of PPE.
o Reclassification of Assets
Assets no longer used, obsolete, and
unserviceable shall be reclassified to
Other Assets and shall not be
depreciated.
o Allowance for Impairment Accounts
Receivable
AFI-A/R, a new account in NGAS, shall
be set-up for estimated uncollectible
trade receivables to allow for their
fair valuation.
o Recognition of Liability
Liability is recognized at the time
goods/services are accepted or
rendered AND bills are received.
o Interest Accrual
Interest income and/or expense shall
be accrued and recognized whenever
practical and appropriate.
o Accounting for Borrowings and Loans
All borrowings and loans shall be
recorded under appropriate liability
accounts. Ex. L/P-domestic or L/P -
Foreign
o Petty Cash Fund
Uses imprest system all
replenishments charged to expense
account; PCF = total COH +
unreplenished expenses.
Not to be used to purchase regular
inventory items
o Foreign Currencu Adjustments
Deposits in foreign currency and
outstanding foreign loans shall be
computed at the exchange rate
prescribed by the BSP at balance
sheet date (mo. End) and any gain or
loss shall be recognized.