BUDGET PROCESS of the

NATIONAL GOVERNMENT AGENCY

THE BUDGET CYCLE

Four Phases in Managing the National Budget:
 Budget Preparation
 Budget Legislation
 Budget Execution
 Budget Accountability
During the preparation phase, the Executive prepares the proposed National
Budget. This is followed by the legislation phase where the Congress authorize the
General Appropriations Act. In the execution phase, agencies utilize their approved
budgets and during the accountability phase the executive phase, agencies
utilize their approved, the executive monitor and evaluate the use of the budget.
1. The Budget Call
At the beginning of the budget preparation year, the Department of Budget and
Management (DBM) issues the National Budget Call to all agencies (including
state universities and colleges) and a separate Corporate Budget Call to all
GOCCs and GFIs.
The budget Call contains budget parameters (*including macroeconomic and fiscal
and agency budget ceilings) as set beforehand by the Development Budget
Coordination Committee (DBCC); and policy guidelines and procedures in the
preparation and submission of agency budget proposals.
*(The National Economic and Development Authority is the country’s premier
socioeconomic planning body, highly regarded as the authority in macroeconomic
forecasting and policy analysis and research. It provides high-level advice to
policymakers in Congress and the Executive Branch. Its key responsibilities include:
(A)Coordination of activities such as the formulation of policies, plans, and programs to
efficiently set the broad parameters for national and sub-national (area-wide, regional,
and local development); (B) Review, evaluation, and monitoring of infrastructure projects
identified under the Comprehensive and Integrated Infrastructure Program consistent
with the government’s thrust of increasing investment spending for the growing demand
on quality infrastructure facilities; and (C)Undertaking of short-term policy reviews to
provide critical analyses of development issues and policy alternatives to decision-
makers.
The established budget process of DBM is Budget Preparation phase, to ensure
that the National Budget is enacted on time. Under the Budget Preparation
Calendar, the Budget Call is issued on January 6, 2021 NBM No. 138
2. Stakeholder Engagement
A new feature in budget preparation which seeks to increase citizen participation
in the budget process, departments and agencies are tasked to partner with civil
society organizations (CSOs) and other citizen-stakeholders as they prepare their
agency budget proposals.
This new process, which was piloted in the preparations of the 2012 National
Budget, is now being expanded towards institutionalizations.
3. Technical Budget Hearing
These are conducted after departments and agencies submit their Agency
Budget Proposal to the DBM. Here, agencies defend their proposal budget before a
technical panel of DBM, based on performance indicators on output targets and
absorptive capacity. DBM bureaus then review the agency proposals and prepare
recommendations.
4. Executive Review
 The recommendations are presented before an Executive Review Board which is
composed of the DBM Secretary and senior officials.
Deliberations here entails a careful prioritization of programs and
corresponding support, vis-a vis the priority agenda of the national government.
Implementation issues are also discussed and resolved.
5. Consolidation, Validation and Confirmation
DBM then consolidate the recommended agency budgets and recommendations
into a National Expenditure Program and a Budget of Expenditures and Sources of
Financing (BESF).
As part of the consolidating process, the deliberations by the DBCC determine the
agency and sectoral allocation of the approved total expenditure ceiling, in line with
the macroeconomic and fiscal program. Heads of major departments are invited to this
meeting.

6. Presentation to President and Cabinet

The proposed budget is presented by DBM, together with the DBCC, to the
President and Cabinet for further refinements of prioritization. After the President and
Cabinet approve the proposed National Expenditure Plan, the DBM prepares and
finalizes the budget documents to be submitted to Congress.
6. Presentation to President and Cabinet
The proposed budget is presented by DBM, together with the DBCC, to the
President and Cabinet for further refinements of prioritization. After the President and
Cabinet approve the proposed National Expenditure Plan, the DBM prepares and
finalizes the budget documents to be submitted to Congress.
President’s Budget Message (PBM)
This is the President explains the policy framework and priorities in the budget
Budget of Expenditures and Sources of Financing (BESF)
Mandated by the Constitution, this contains the macroeconomic assumptions, public
sector context (including overviews of LGU and GOCC financial positions), breakdown
of the expenditures and funding sources for fiscal year and the two previous year.
National Expenditure Program (NEP)
This contains the details of spending for each department and agency by program,
activity or project and is submitted in the form of a proposed General Appropriations
Act.
Details of Selected Programs and Projects
This contains a more detailed disaggregation of key programs, projects and activities
in the NEP, especially those in line with the national government’s development plan.
Staffing Summary
This contains a summary of the staffing complement of each department and agency,
including number of positions and amounts allocated for the same.

 This is the second phase of the budget process. It involves the

review/deliberation by Congress of the National Expenditure Program (NEP) as
submitted by the President, and its subsequent enactment into law. In its
review, Congress is guided by the provision of law that it cannot increase the
budget submitted to them by the President. In implementing this provision of
law, specific activities may be increased but to be offset by a corresponding
decrease in other activities, provided that the overall expenditure level is not
increased.
Kinds of Veto: (1) Conditional Veto, (2) Direct Veto, and (3) General Observation.

Budget Authorization/ Legislation Phase

What happens if the GAA is not passed?

 On the basis of the Constitutional provision, the budget of the previous year
shall be deemed re-enacted.

Budget Execution/ Implementation Phase

 This is the third phase of the budget process. Obligational and disbursement
authorities are being issued by DBM to the departments and agencies in order
that implementation of the programs, activities and projects authorized in the
GAA takes place. As basis for the release of such authorities, DBM requires
 agencies to submit Budget Execution Documents (BEDs), through a
DBM issuance.

1. Release Guidelines and Program

(A) GAAAO-The appropriation for Programs/Activities/ Projects (PAPs) are deemed
released, except for items classified as, “For Later Release (FLR)”.
(B) GARO-is the annual requirement for Government Share of the Retirements and Life
Insurance Premium (RLIP) which is 12% of Basic Salary of Teaching and Non-Teaching
employees. This does not include RLIP for newly created positions.
© SARO-covers the “For Later Release”(FLR) items upon submission of a Special
Budget Request (SBR). Composed of Centrally Managed Items (CMI) & Special Purpose
Funds (SPF).
(d)Sub-ARO- an internal document issued by DepEd Central Office, Regional,
transferring a portion of available allotment to Spending Units (SUs) /Implementing
Units (IUs).
2. Budget Execution Documents
BED 1-Financial Plan (FP) which shows the overall financial plan of the agency for the
year, with quarterly breakdown
BED 2-Physical Plan (PP) which shows the physical targets for the year, with quarterly
breakdown
BED 3-Monthly Disbursement Program (MDP) which reflects the monthly
disbursement requirements of agencies, by type of disbursement. It is the basis for the
issuance of the disbursement authority (e.g., NCA, NCAA, TRA).
BED 4– Annual Procurement Plan for Common Use Supplies and Equipment (APP-
CSE) which projects the monthly procurement in terms of quantity and cash,
categorized into items available at the Procurement Service, DBM, and not available.
Note: The BEDs are accordingly updated upon enactment of the GAA to effect any
modification on the NEP by Congress or Senate. BEDs are submitted on-line though
the Unified Report System (URS).
Purpose of Budget Execution Documents
1. To ensure availability of funds for critical programs/activities/projects
consistent with the physical and financial plans/targets/schedules as
submitted
2. To set the benchmark in agency performance that shall be used in
determining the achievement of objectives and targets in the delivery of
services
3. Allotment and Cash Release Program
Notice of Cash Allocation (NCA)
 This is a cash authority issued periodically by the DBM to the operating units of
agencies to cover their cash requirements.
 The NCA specifies the maximum amount of cash that can be withdrawn from a
government servicing bank for the period indicated.
 The release of NCAs by DBM is based on an agency’s submission of its Monthly
Disbursement Program (MDP-BED 3) and other required documents.
Others Disbursement Authorities.
 In contrast to NCAs, Non-Cash Availment Authority (NCAA)
are issued to authorize non-cash disbursements.
 Cash Disbursement Ceiling (CDC) are meanwhile issued to departments with
overseas operations, allowing them to use income collected by their foreign
posts for their operating requirements.
4. Allotment Releases
5. Incurrence of Obligations
Note: For accurate monitoring and reporting on the utilizations & balances of
appropriations and allotments, correct and proper charging of account and recording
in the appropriate registries, as prescribed under the Government Accounting Manual
(GAM).
1. Budget Staff - Receives GAARD, SAROs, GAROs & Sub-AROs from DBM, and
DepEd CO and RO, as the case may be. Records in the logbook and forwards
the OAs to Budget Staff in-charge of recording in the Registries.
2. Budget Officer - Disaggregates & records the GAARD, SAROs, GAROs & Sub-
AROs in the RAPAL and RAOD under its corresponding Allotment Class.
Forward a copy to Accounting Unit for reference.
6. DISBURSEMENT
This is the final step of the budget execution phase, where government monies are
actually spent. The Modified Disbursement Scheme is mostly used, where
disbursements of national government agencies chargeable against the
Treasury are made through government servicing banks, such as the Land
Bank of the Philippines.
The budget process, of course, does not end when government agencies spend
public funds: each and every peso must be accounted for to ensure that is used
properly, contributing to the achievement of socio- economic goals.

Budget Execution/ Implementation Phase

Timelines in Submitting the BEDs to DBM:
 Deadline for the submission of BEDs to DBM – not later than November 30
 DBM consultation, consolidation and evaluation –
December 1 to 15
 DBM finalization and agency confirmation - December 16 to 30
 Formulation/approval of DBCC Disbursement Program – January 1 to 15
 Notification to agency of approved MDP and posting of the same in the DBM
and agency websites
 Submission of revised MDP – not later than May 31

Note: In case of incomplete/non-submission of MDP by November 30, the DBM shall

formulate/determine the level and schedule of agency cash program
 Budget Execution/ Implementation Phase
Obligational Authorities:

a) General Appropriations Act as Allotment Order (GAAAO);

b) General Allotment Release Order (GARO);
c) Special Allotment Release Order (SARO);
d) Sub-Allotment Release Order (Sub-ARO)

(a) GAARD-The appropriation for Programs/Activities/ Projects (PAPs) are deemed

released, except for items classified as, “For Later Release (FLR)”.
(b) GARO-is the annual requirement for Government Share of the Retirements and Life
Insurance Premium (RLIP) which is 12% of Basic Salary of Teaching and Non-Teaching
employees. This does not include RLIP for newly created positions.
(C) SARO-covers the “For Later Release”(FLR) items upon submission of a Special
Budget Request (SBR). Composed of Centrally Managed Items (CMI) & Special Purpose
Funds (SPF).
(d)Sub-ARO- an internal document issued by DepEd Central Office, Regional,
transferring a portion of available allotment to Spending Units (SUs) /Implementing
Units (IUs).

Budget Execution/ Implementation Phase

Disbursement Authorities:
a) Notice of Cash Allocation (NCA) = for regular operations;
b) Non-Cash Availment Authority (NCAA) = for loans in kind;
c) Cash Disbursement Ceiling (CDC) = for foreign post’s expenses.
d) Tax Remittance Advice (TRA) = for remittance of tax withheld by the
agency

Notice of Cash Allocation (NCA)

 This is a cash authority issued periodically by the DBM to the operating units of
agencies to cover their cash requirements.
 The NCA specifies the maximum amount of cash that can be withdrawn from a
government servicing bank for the period indicated.
  The release of NCAs by DBM is based on an agency’s submission of its Monthly
Disbursement Program (MDP-BED 3) and other required documents.
Others Disbursement Authorities.
 In contrast to NCAs, Non-Cash Availment Authority (NCAA)
are issued to authorize non-cash disbursements.
 Cash Disbursement Ceiling (CDC) are meanwhile issued to departments with
overseas operations, allowing them to use income collected by their foreign
posts for their operating requirements.

What is the first thing to do upon receipt of the Allotment?

RAPA RAOD
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MOOE MOOE

CO CO

 Registry of Appropriations and Allotments (RAPAL)

 Registry of Allotments, Obligations and Disbursements (RAOD)

Note: For accurate monitoring and reporting on the utilizations & balances of
appropriations and allotments, correct and proper charging of account and
recording in the appropriate registries, as prescribed under the Government
Accounting Manual (GAM).
1. Budget Staff - Receives GAARD, SAROs, GAROs & Sub-AROs from DBM, and
DepEd CO and RO, as the case may be. Records in the logbook and forwards
the OAs to Budget Staff in-charge of recording in the Registries.
2. Budget Officer - Disaggregates & records the GAARD, SAROs, GAROs & Sub-
AROs in the RAPAL and RAOD under its corresponding Allotment Class.
Forward a copy to Accounting Unit for reference.
3. Budget Office Certifies Availability of Allotment in the ORS
Requesting Office
1. Prepares ORS and attaches supporting documents
2. Head of Requesting Office certifies that the charges to appropriations/
allotment is necessary and lawful, and is under his/her direct
supervision, and supporting documents are valid, proper and legal
 3. Forwards to Budget Unit/Division for certification as to availability of
allotment

Budget Unit/Division
1. Analyzes and reviews request
2. Verifies availability of allotments
Verifies availability of allotments
3. Processes and completes the entries (i.e. UACs) in the ORS
4. Posts in the Registry of Allotment and Obligation (RAO)
5. Budget Officer certifies that appro/ allotment is available & obligated for the
purpose
Procedure of Realignment
• For change from one allotment class to another, the approving authority
is DBM:
1.The Department/Agency submits request to DBM indicating what is to be
realigned, properly supported with the required documents; and
2. DBM evaluates and approves if request merits approval, then issue the
necessary document authorizing the realignment.
Required Supporting Documents for “Request for Realignment”
1. Work and Financial Plan (WFP)
2. Justification of Request
3. Certificate of Savings by the Agency/RO/DO/IU Budget Officer or
designate
4. Certificate of Agency/RO/DO/IU head of priorities for realignment of
programs and projects; and
5. Confirmation of concerned representative for realignment or relocation
of infrastructure and other Capital Outlays.

Budget Accountability/Reporting Phase

Implementation Phase
 Fourth and final phase of the budget process. It involves the reporting of
physical accomplishments and funds utilization of agencies. Agencies
report how much of the funds released to them were utilized.

Through Budget Accountability, the DBM monitors the efficiency of fund

utilization, assesses agency performance and provides a vital basis for
reforms and new policies.
1. PERFORMANCE & TARGET OUTCOMES
Agencies are held accountable not only for how these use public funds
ethically, but also on how these attain performance targets and outcomes
using available resources.
These performance measures are set alongside the preparation of the
National Budget; and these are indicated in the OPIF Book of Outputs.
Prior to the execution of the enacted National Budget, these performance
targets are firmed up during the preparation of BEDs.

2. BUDGET ACCOUNTABILITY REPORTS (BARs)

Submitted by agencies on a monthly and quarterly basis, BARs are required
reports that show how agencies used their funds and identify their
corresponding physical accomplishments.
These include quarterly physical and financial reports of operations;
quarterly income reports, a monthly statement of allotments, obligations
and balances; and monthly report of disbursements.
3. NO REPORT, NO RELEASE
• Starting 2012, the DBM will be withholding certain fund releases to
agencies if these fail to submit their Budget Accountability Reports. In
particular, these will be funds from the Miscellaneous Personnel Benefits
Fund (MPBF) for compensation adjustments under the Salary
Standardization Law, provisions for unfilled positions and employee
clothing allowances.
• These funds to be withheld are only limited to agencies’ MPBF allotments
so that only the agencies are penalized and that the implementation of
critical programs and projects will not be disrupted. Errant and
compliant agencies will also be posted online for public scrutiny.
4. REVIEW OF AGENCY PERFORMANCE
The DBM regularly reviews the financial and physical performance of
agencies. Actual utilization of funds and physical accomplishments, as
indicated in the agencies’ BARs, are evaluated against their targets as
 identified via OPIF and in the agencies’ BEDs. Agency Performance
Reviews (APRs) are conducted quarterly or every semester, as the case
may be.
An annual Budget Performance Assessment Review (BPAR) is conducted to
determine each agency’s accomplishments and performance by the year-
end. The DBM regularly reports results to the President
Performance-Based Incentive System
The Department of Budget and Management (DBM) is also in the
process of establishing a performance- based incentive system- which
will recognize and reward good performance among government
employees- to help improve the efficiency of service delivery across all
government institutions.
5. AUDIT
Auditing is not within the DBM’s jurisdiction, and is instead lodged under
the Commission on Audit (COA).
Nonetheless, auditing is critical in ensuring agency accountability in the
use of public funds.
The DBM uses COA’s audit reports in confirming agency performance,
determining budgetary levels for agencies and addressing issues in fund
usage.
Importance of Accountability Reporting
1. - For management consumption
2. - Assessment of agency performance (physical and financial)
3. - Compliance to requirements of oversight agencies
For decision-making
1. Receipt, utilization and available balances
Allotment
Cash Allocation
Assessment of Agency Performance - The result of which serves as
basis of the Department of Budget and Management (DBM) in:
1. Releasing unreleased appropriations under the “For Later Release of
the Not Needing Clearance Portion” of the approved GAARD.
2. Additional Release from Special Purpose Funds (SPFs)
3. Approval of requests for realignment of funds
4. Withdrawal of previously released allotment
5. Revision of disbursement program
6. Revision of targets

GROUP 1 MEMBERS:
ROXANNE MALLARI
LORADEL PADERES
JULIE-ANN PADRE