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Chapter 3 Govt Accounting Process

GOVT

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53 views3 pages

Chapter 3 Govt Accounting Process

GOVT

Uploaded by

mariajulianamaelaudit
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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The Government Accounting Process

The government accounting process is a systematic series of activities aimed at managing


public funds effectively. It involves analyzing, recording, classifying, summarizing, and commu-
nicating transactions related to the receipt and disposition of government funds and property,
as well as interpreting the results of these activities. Although the fundamental principles of
this accounting process are akin to those used by business entities, government accounting
uniquely incorporates budgetary controls. This includes maintaining budget registries and
preparing periodic budget accountability reports, which ensure that public funds are utilized
effectively and transparently.

Books of Accounts and Registries


Government entities organize their financial information using various accounting records.
These records are primarily categorized into three types:
1. Journals • General Journal: Used for transactions not recorded in other journals.• Cash
Receipts Journal: Records all collections and deposits, providing a clear account of revenue
inflow.• Cash Disbursements Journal: Tracks disbursements made by disbursing officers.•
Check Disbursements Journal: Specifically records disbursements made via checks.
2. Ledgers • General Ledgers: Summarizes all transactions from the journals. Accounts in
the general ledger are organized according to the Revised Chart of Accounts.• Subsidiary
Ledgers: Offer detailed accounts associated with control accounts present in the general
ledger.
3. Registries • Registries of Revenue and Other Receipts (RROR): Monitor budgeted
amounts, actual collections, and remittances.• Registry of Appropriations and Allotments
(RAPAL): Ensures that allotments do not exceed appropriations.• Registries of Allotments,
Obligations, and Disbursements (RAOD): Track allotments received, obligations incurred,
and actual disbursements made.• Registries of Budget, Utilization, and Disbursements
(RBUD): Used to record approved special budgets and associated utilizations.

While journals and ledgers are the core accounting records, registries primarily serve as budget
records, instrumental in monitoring adherence to budgetary constraints. The accounting unit
of the agency is responsible for maintaining journals and ledgers, while the budget division
manages registries.

Budget Registries
Budget registries are crucial for effective budget monitoring and reporting. They include:
1. RROR: Helps track actual collections against budgeted estimates.
2. RAPAL: Monitors appropriations and allotments to ensure compliance.
3. RAOD: Maintains careful oversight of all allotments and disbursements to prevent
overspending.
4. RBUD: Records approved special budgets along with their utilizations.

Each of these registries serves specific functions within the broader framework of budget
management and financial accountability.

Classifications of Expenditures
Expenditures are classified by object, reflecting the nature of the spending:
• Personnel Services (PS): Covers employee-related expenses such as salaries, bonuses,
and cash gifts.
• Maintenance and Other Operating Expenses (MOOE): Encompasses operational costs
excluding employee benefits, including travel, utilities, and supplies.
• Financial Expenses (FE): Pertains to costs related to financing, such as interest expenses
and bank charges.
• Capital Outlays (CO): Involves larger expenditures for public infrastructures and equipment
acquisition.

Separate RAODs are maintained for each object of expenditure, including RAOD-PS for
personnel services, RAOD-MOOE for maintenance and operating expenses, RAOD-FE for
financial expenses, and RAOD-CO for capital outlays.

Keeping of the General Accounts


The Commission on Audit (COA) holds the responsibility for maintaining the general accounts of
the Government, preserving all related vouchers and supporting documents. The fundamental
recording processes begin with the appropriation of funds. For example, Entity A receives funds
through the General Appropriations Act (GAA), detailing allocations for Personnel Services,
MOOE, FE, and CO.

Recording Appropriations and Allotments


When Entity A receives its allotment from the Department of Budget and Management (DBM),
these amounts must be recorded meticulously in the RAPAL and RAOD registries. This dual
entry ensures a balanced approach to fiscal management and transparency.

Incurrence of Obligation
Obligations are legally binding commitments that require the assessment and action through
formal documentation known as the Obligation Request and Status (ORS). This document is
prepared by requesting offices and should be supported by valid claim documents, such as
disbursement vouchers and payrolls. The head of the requesting office certifies the necessity of
the service, while the head of the budget division assures that sufficient allotments are available.
For instance, Entity A might enter into contracts for various services, each necessitating its own
ORS. Obligations incurred are subsequently recorded in the RAOD to maintain visibility over
commitments against the allotments.

Adjusting Obligations
If adjustments to obligations become necessary, these can be handled through a Notice
of Obligation Request and Status Adjustment (NORSA). This document allows for positive
(additions) or negative (reductions) entries to reflect changes accurately.

Disbursement Authority
When the Notice of Cash Allocation (NCA) is received, journal entries are made to reflect the
increase in cash and revenue. For example, the receipt of a P200,000 NCA prompts an entry
that recognizes both the cash inflow and the corresponding revenue.
The registries used to monitor the NCA include:
• Registry of Allotments and NCA (RANCA)
• Registry of Allotment and Notice of Transfer of Allocation (RANTA)

These records ensure that management can track available balances and make informed
financial decisions.

Journals and Ledgers


As part of this rigorous accounting system, various journals are used to record specific
transactions, including:
• General Journal: Captures transactions not recorded elsewhere.
• Cash Receipts Journal: Logs all collections.
• Cash Disbursements Journal: Notes all disbursements.
• Check Disbursements Journal: Specifically records all transactions made via checks.

Once services are rendered, journal entries are created to reflect the necessary changes in
accounts, such as salaries payable, deductions, and remittances to various agencies.

Remittances and Billings


Remittances are critical for maintaining legal compliance and financial accuracy. The Tax Remit-
tance Advice (TRA) serves as documentation for taxes withheld and facilitated by government
entities. This constructive remittance identifies the acknowledgment of withholdings and related
responsibilities.
While billing revenue and collections must follow all legal stipulations, government entities
consistently seek efficiency in their financial operations, ensuring all practices align with laws
and regulations.

The Government Accounting Cycle


To summarize the flow of the government accounting process, it includes:
1. Appropriation
2. Allotment
3. Incurrence of Obligation
4. Disbursement Authority (NCA)
5. Disbursements
6. Billings, Collections, and Remittance
7. Unadjusted Trial Balance
8. Adjusting Entries
9. Closing Entries
10. Preparation of Financial Statements

These steps demonstrate the comprehensive nature of government accounting, emphasizing


the importance of accuracy, compliance, and fiscal responsibility in the management of public
resources.

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