Gov Act 1.pdf

Government Accounting &

Accounting for non-profit organizations

by: ZEUS VERNON B. MILLAN

Chapter 1 Overview of Government Accounting Learning Objectives • Differentiate government accounting from the accounting for business entities. • State the government entities charged with accounting responsibility. • Describe briefly the GAM for NGAs. • State the basic principles used in government accounting. • State the recognition criteria for assets. GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Definition of Government Accounting “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.” (State Audit Code of the Philippines, P.D. No. 1445, Sec. 109)

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Government Accounting vs. Business Accounting Compared to the accounting for business entities, government accounting places greater emphasis on the following: • Sources and utilization of government funds; and • Responsibility, accountability and liability of entities entrusted with government funds and properties.

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Responsibility, Accountability and Liability over Government Funds and Property • Government resources must be utilized efficiently and effectively in accordance with the law. • The head of a government agency is directly responsible in implementing this policy. • All other personnel entrusted with the custody of government resources are responsible to the head of the government agency, are accountable for the safeguarding thereof, and are liable for any losses. GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Accounting responsibility The following offices are charged with government accounting responsibility: 1. Commission on Audit (COA) 2. Department of Budget and Management (DBM) 3. Bureau of Treasury (BTr) 4. Government agencies

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Commission On Audit (COA) Responsibilities of COA • Promulgate accounting and auditing rules • Keep the general accounts • Submit financial reports

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Department of Budget and Management (DBM) Responsibility of DBM • Implementation of the national budget

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Bureau of Treasury (BTr) Responsibility of DBM • Cash custody and control of disbursements.

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Government Agencies Responsibility of government agencies • Maintain accounting books and budget registries which are reconciled with the cash records of the BTr and the budget records of the COA and DBM.

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

The GAM for NGAs • The Government Accounting Manual for National Government Agencies (GAM for NGAs) is promulgated by the COA under the authority conferred to it by the Philippine Constitution. • The GAM for NGAs was promulgated primarily to harmonize the government accounting standards with the International Public Sector Accounting Standards (IPSAS). The IPSASs are based on the IFRSs. GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Objectives of the GAM for NGAs To update the following: • Standards, policies, guidelines and procedures in accounting for government funds and property; • Coding structure and accounts; and • Accounting books, registries, records, forms, reports and financial statements.

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Basic Accounting and Budget reporting Principles • Compliance with PPSAS and relevant laws, rules and regulations • Accrual basis of accounting • Budget basis for presentation of budget information in the financial statements • Revised Chart of Accounts • Double entry bookkeeping • Financial statements based on accounting and budgetary records • Fund cluster accounting GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Fund clusters

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Qualitative Characteristics • • • • • • • • • • •

Understandability Relevance Materiality Timeliness Reliability Faithful representation Substance over form Neutrality Prudence Completeness Comparability GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Components of General Purpose Financial Statements 1. Statement of Financial Position; 2. Statement of Financial Performance; 3. Statement of Changes in Net Assets/Equity; 4. Statement of Cash Flows; 5. Statement of Comparison of Budget and Actual Amounts; and 6. Notes to the Financial Statements

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Recognition of an Asset An item is recognized as asset if it meets all of the following criteria: (1) It meets the definition of an asset; (2) Probable inflow of future economic benefits; and (3) Reliable measurement of cost or other value (e.g., fair value).

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

END GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan