Local Fiscal

Administration
The Barangay Budget and the Budget
Process

POWER TO ALLOCATE
RESOURCES
What is the legal basis for barangay
budgeting?

Sections 329-334 (Barangay Budget) of the Local

Government Code of 1991 (RA No. 7160) provide the
basis for the collection, safekeeping and use of barangay
funds. The aforesaid provisions govern the preparation,
effectivity, and review of the barangay budget, including
the financial procedures that the barangay shall observe.
 The Budget Cycle
Preparation
SK Chairperson

Accountability Authorization
Sangguniang
SK Chairperson
Kabataan

Review
Execution Sangguniang Bayan
SK Chairperson Thru MBO
BUDGET
PREPARATION
 BUDGET PREPARATION
Who Prepares the Budget?

The Punong Barangay (PB) with the assistance of the

Barangay Treasurer and in consultation with the
Sangguniang Barangay (SB) and Barangay
Development Council (BDC) prepare the barangay
budget consisting of the following:
1. Estimates of Income
2. Total Appropriations as Proposed by
the Punong Barangay (PB)
 BUDGET PREPARATION
When is the Budget Prepared?
The PB shall prepare the barangay budget for the coming
Fiscal Year upon receipt of the detailed Statement of
Income and Expenditures from the Barangay Treasurer on
or before September 15 of each year.
What are the contents of the Barangay Budget?
• Budget Message
• Barangay Expenditures Program (BEP) or “Proposed General
Barangay Appropriations Bill”
• Summary of Financial Statements
• Summary of Actual and Estimated Output.
 BUDGET PREPARATION
How is the Barangay Budget Prepared?

Step 1 • Issuance of Budget Call (Sept. 20)

Step 2 • Preparation of Budget Proposal (Sept. 25)

• Budget Forum w/ Brgy Officials & Stakeholders

Step 3
(Sept. 26)
• Submission of Executive Budget to the
Step 4
Sangguniang Barangay (Oct. 16)

Step 5 • Preparation of Budget Message (Oct. 10)

Step 6 • Finalization of BEP/ Appropriations Bill (Sept. 30)

Indicative Budget Calendar

 BUDGET PREPARATION

Mandatory Allocations

Internal Revenue Allocation (IRA) share shall be used for basic

services delivery including administrative and legislative services:

§ 20% of the IRA shall be used for priority development projects

§ 10% of the General Fund shall be allocated for the Sangguniang
Kabataan (SK)
§ 5% of Regular Income shall be used for unforeseen calamities.
 BUDGET PREPARATION

Mandatory Allocations
 20% of the IRA shall be used for priority development projects

 10% of the General Fund shall be allocated for the Sangguniang

Kabataan (SK)

 5% GF of Regular Income shall be used for unforeseen calamities

based on RA 10121;
 5% for Gender and Development;
 2% of RPT (next preceding fiscal year) for discretionary fund;
 1% of IRA for BCPC;
 1% of GF for PWD and Elderly
 BUDGET PREPARATION

Mandatory Allocations

55% of Total Regular Income of Next Preceding Year

For Example: Regular Income is…

Budget Year 2008………1,000,000.00

Preceding Year 2007…. 900,000.00
Next Preceding Year….. 700,000.00

For purposes of computing the PS cap during the preparation of the

budget for CY 2008, we use the next preceding year as the basis.

Therefore, 700,000.00 x 55% is P385,000.

BUDGET
AUTHORIZATION
THE STAGE WHERE THE BARANGAY BUDGET IS
SUBMITTED FOR AUTHORIZATION TO THE
SANGGUNIANG BARANGAY
 “No money shall be paid
out of the local treasury
except in pursuance of an
appropriations ordinance
or law.”
Section 305 of Republic Act No. 7160
POLICY MAKING
REVENUE GENERATION
APPROPRIATION
OVERSIGHT
 PROCESS FLOW
BUDGET AUTHORIZATION
Executive Budget
Budget Message

submits on or before Oct. 16

of the current budget year

Punong Barangay

Appropriations
Ordinance
enacts the budget on or before the Sangguniang Barangay
end of the current FY
STEPS IN BUDGET AUTHORIZATION
Presentation Of The Executive
Budget to the SB

Deliberation by the SB on the

Executive Budget

Enactment of the General

Appropriations Ordinance (GAO)

Approval of the GAO by the

Punong Barangay
 GUIDELINES ON
BUDGET
SUBMISSION

DUE DATE OF Not later than the16th of

SUBMISSION: October of the current
fiscal year
Section 318 of R.A. 7160

PUNONG BARANGAY
BUDGET AUTHORIZATION
 EFFECTS OF FAILURE TO
ENACT BUDGET

The ordinance authorizing the appropriations of

the preceding year shall be deemed REENACTED.

The SB shall, however, continue to hold

sessions until the ordinance authorizing the
annual budget is approved.
Without additional
renumeration

Sec. 323 of Republic Act No. 7160

 EFFECTS OF FAILURE TO
ENACT BUDGET

If the sanggunian still fails to enact such

ordinance after ninety (90) days from the
beginning of the fiscal year, the reenacted
budget shall remain in force and effect
until the ordinance authorizing the
proposed appropriations is passed.

Sec. 323 of Republic Act No. 7160

 EFFECTS OF FAILURE TO
ENACT BUDGET
ITEMS DEEMED REENACTED
Honoraria of Barangay Officials

Salaries and Wages of Existing Positions

Statutory and Contractual Obligations

Essential Operating Expenses

BUDGET AUTHORIZATION
 EFFECTS OF FAILURE TO
ENACT BUDGET
PROHIBITED ACTS
Undertaking of NON-
Implementation of
RECURRING ACTIVITIES
NEW PROJECTS
(no matter how vital)

FILLING up of
POSITIONS
 CHANGES ON THE
ANNUAL BUDGET

Through SUPPLEMENTAL BUDGET/S

When supported by funds actually available as
certified by the Treasurer
 actual collections exceed estimated income

 when there are savings

 CHANGES ON THE
ANNUAL BUDGET

Through SUPPLEMENTAL BUDGET/S

When covered by new revenue sources

In times of public calamity by way of

budgetary realignment
BUDGET REVIEW
 What is REVIEWED?

GAO within
10 DAYS
ANNUAL after
BUDGET enactment
SUPPLEMENTAL
BUDGET
 PURPOSE
Compliance
budgetary requirements and general
limitations
budget shall not exceed the estimated
receipts/income
item of appropriations are not
more than those provided by
law
 SANGGUNIANG
BAYAN
SANGGUNIANG
PANLUNGSOD Thru

SEC. 333 OF REPUBLIC ACT NO. BUDGET REVIEW

7160
 DURATION OF REVIEW

DAY 1 60th DAY

starts upon official last day budget
receipt of the can be reviewed
budget
 EFFECTS OF FAILURE TO
REVIEW BUDGET

If the sanggunian fails to review the

Barangay Budget within the sixty (60)-
day period, the budget is deemed in
full force and effect.

Sec. 333 of Republic Act No. 7160 BUDGET REVIEW

CONFLICT IN BUDGET
REVIEW

Where to APPEAL FOR RECONSIDERATION

 City/Municipal Legal Officer
- assigned to review and submit
recommendation on approved
ordinances and executive orders issued

BUDGET REVIEW
CONFLICT IN BUDGET
REVIEW

Where to APPEAL FOR RECONSIDERATION

DBM Regional Office

- for technical assistance

BUDGET REVIEW
BUDGET
EXECUTION
 BUDGET EXECUTION
(Jan. 1 – Dec. 31)

What does the Local Gov’t Code say?

Effectivity of Barangay Budgets. Section 332

provides that “the ordinance enacting the
annual budget shall take effect at the beginning
of the ensuing calendar year. An ordinance
enacting a supplemental budget, however, shall
take effect upon its approval or on the date
fixed therein.
BUDGET EXECUTION
Who is responsible for the execution of the
barangay budget?

The PUNONG
BARANGAY
is responsible for the
execution of
Barangay Budget
BUDGET EXECUTION
The PUNONG BARANGAY shall ensure that:
• Revenues as estimated are realized;
• Approved development projects and basic services
are implemented and delivered;
• Barangay funds are disbursed in accordance with
the appropriation ordinance(GAO) and reviewed
annual budget; and thru the SARO
• All financial transactions of the barangay follow
accounting and auditing rules.
 BUDGET EXECUTION
Process Flow

GAO and
Prepare Cash
reviewed Prepare SARO
Program
annual budget

Prepare
Prepare Prepare
Quarterly
Disbursement Obligation
Performance
Voucher Request
Targets

Pay obligations/ issue

checks
What are the Basic Consideration in Cash
Programming?

• The Cash Program for PS should FULLY PROVIDE

the compensation benefits of barangay officials;

•Must take into consideration the TIMING of the

Grant of Mid-Year & YEB, PIB & other similar items of
expenditures;

•SEASONAL /PEAK PERIODS or SLACK times in the

provision of MOOE
BUDGET EXECUTION
Basic Policies
FINANCIAL RECORDS
To be kept in the custody of the Barangay Treasurer and
Municipal Accountant
 Books of Accounts
 Statement of Income and Expenditures
 Balance Sheets
 Trial Balances
BUDGET EXECUTION
Basic Policies
UNEXPENDED BALANCES of APPROPRIATIONS

PS
Revert to the General Fund
MOOE

MOOE Form part of Continuing

CO Appropriations

Add to the 10% share of the SK for

10% SK Fund
next year
BUDGET EXECUTION
Basic Policies
UNEXPENDED BALANCES OF APPROPRIATIONS
Revert to the General Fund;
Re-appropriate for other development projects

20% Dev’t
Fund

from completed
or discontinued
projects
BUDGET EXECUTION
Basic Policies
PETTY CASH FUND
A small amount of cash given to a BT or DO for direct
purchase or for payment of ordinary and essential needs of
the barangay

 Replenishments shall be directly charged to the expense

account;
 At all times, PCF shall equal to the total cash on hand and
the unreplenished expenses;
BUDGET EXECUTION
Basic Policies
PETTY CASH FUND
 Shall not exceed 20% of the funds available to the
credit of the barangays;
 Replenished when disbursements reach at least 75%
of the PCF or as needed;
 Only a maximum of P1,000.00 can be charged against
the PCF at any one time;
BUDGET EXECUTION
Basic Policies
PETTY CASH FUND
 Disbursements are to be documented by cash
invoices, credit invoices with OR and other
evidences of disbursement and required
supporting papers.
BUDGET EXECUTION

Basic Policies

Barangay CASH ADVANCE

 A bigger amount of money, as compared to petty

cash, given to regular or special disbursing officers
(D.O.) for specific public purposes.

 Regular cash advance includes expenses for

honoraria and other similar payments.
BUDGET EXECUTION
Basic Policies
Barangay CASH ADVANCE

 Only duly permanently appointed

officials/employees shall be granted cash advance;
 Only duly appointed or designated D.O. who are
bonded may perform disbursing functions;
 Only one disbursing officer shall be
assigned/designated for a specific purpose;
BUDGET EXECUTION
Basic Policies
Barangay CASH ADVANCE
 Transfer of accountability for cash advance shall not be
allowed;
 A cash advance for a particular year shall not be used to
pay for expenses made in other years;
 All cash advances shall be fully liquidated at the end of
each year.
 ….take note…..
 BUDGET
ACCOUNTABILITY
LEGAL BASIS

• SECTION 332 OF R.A. 7160

“THE RESPONSIBILITY FOR THE

EXECUTION OF THE ANNUAL AND
SUPPLEMENTAL BUDGETS AND THE
ACCOUNTABILITY THEREFORE SHALL BE
VESTED PRIMARILY IN THE PUNONG
BARANGAY CONCERNED”
BUDGET ACCOUNTABILITY DEFINED

• Last stage - whereby financial and physical

performance are recorded, monitored,
validated and evaluated purposely to assess
whether performance is in accordance with
targets or budget plans

• Any negative deviations from planned targets

are provided with corrective actions
PROCESS FLOW IN ACCOUNTABILITY

RECORD DEPOSIT ALL

COLLECTIONS ISSUE ORs COLLECTIONS

SEGREGATE RECORD ALL COLLECT RPT

EXPENDITURE OBLIGATIONS/ AND OTHER
LEVELS DISBURSEMENTS TAXES

POST INCOME POST BAF MONITOR &

FOR THE QTR 1-3 EVALUATE
PERFORMANCE
PERSONS RESPONSIBLE
FOR REPORTING
• Punong Barangay;
• Chairman, Appropriations Committee of
Sangguniang Barangay;
• Barangay Treasurer; and,
• City/Municipal Treasurer/Accountant
REASONS FOR RECORDING
AND REPORTING

• To provide information on status of service

delivery/project implementation and serve as
basis for necessary corrective action for
identified deviations;

• To ensure that obligations are incurred within

the limits of the approved appropriations;
REASONS FOR RECORDING
AND REPORTING
• To record unpaid obligations, both current and
those certified to as accounts payable at
yearend;

• To make brgy transactions and financial status

transparent and a matter of public knowledge;

• To serve as basic input into the next budget

preparation