Nature and scope of New Government Accounting System

New Government Accounting System (NGAS)

Is a simplified set of accounting concepts, guidelines and procedures designed to ensure correctness,
completeness, and timeliness in the recording of government financial transactions, and production of
financial reports.

The Commission on Audit (COA) revised the existing government accounting system.

Pursuant to the Commission on Audit Circular No. 2001-004 dated October 30, 2001, all
government agencies were prescribed to use the New Government Accounting System (NGAS)
effective January 1, 2002. The NGAs is a simplified set of accounting concepts, guidelines
and procedures designed to ensure correct, complete and timely recording of government financial
transactions, and productions of accurate and relevant financial reports.

The New Government Accounting System (NGAS) took effect last January 1, 2002

OBJECTIVE

1. Simplify government accounting;

2. Conform to international accounting standards; and

3. Generate periodic and relevant financial reports for better monitoring of performance.

1. Adoption of an accounting system that is in conformity with the International Accounting Standards.

2. Computerization of the accounting systems to generate reports that will be easy to understand by the

general public.

3. Preparation of regular and routinary financial reports.

4. The use of the generated financial reports as tools of management in decision making.

GOVERNMENT ACCOUNTING

is the process of recording, analyzing, classifying, summarizing, communicating and interpreting

financial information about government in aggregate and in detail reflecting transactions and other
economic events involving the receipt, spending, transfer, usability and disposition of assets and
liabilities.
FUNCTION OF INTERNATIONAL ORGANIZATION OF SUPREME AUDIT INSTITUITION

Supreme audit institutions are national agencies responsible for auditing government revenue and
spending. Their legal mandates, reporting relationships, and effectiveness vary, reflecting different
governance systems and government policies. But their primary purpose is to oversee the management
of public funds and the quality and credibility of governments reported financial data

Accounting Responsibility - Under PD 1445, accounting responsibility for all government

funds and property is entrusted, immediately and primarily, to the head of the government agency or
office. It is the duty of the head of the agency to take reasonable steps to minimize, if not to avoid the
risk of losses, defalcations and other types of irregularities in the utilization of all government resources
(to safeguard the resources of the government under his custody) and periodic reporting to concern
authorities. His responsibility, however, is supervised by higher authorities and government bodies.

The officer in possession or custody of government funds or property by reason of his duties are
accountable for the safekeeping thereof. As such, he shall be properly bonded.

The Head of the agency is made immediately and primarily responsible for all government funds
and property pertaining to his agency. Secondary responsibility is made to rest on the persons
entrusted with the actual possession or custody of the funds or property. They are the accountable
officers and are immediately responsible to the agency head.

The imposition of primary responsibility on the agency head for government funds and property is in
keeping with the concept of fiscal responsibility which now lodge with agency head.

The head of the agency shall exercise the diligence of a good father or a family in supervising
accountable officers to prevent the incurrence of loss of government funds and property, otherwise, he
shall be jointly and solidarily liable with the person primarily accountable thereof.

Although supervisory work of government accounting is vested upon to the Commission on Audit,
accounting responsibilities in the government, by virtue of the provision of the Constitution of the
Philippines, laws, Presidential Decrees and other issuances, are shared primarily by the Commission on
Audit(COA), Department of Budget and Management, (DBM), Department of Finance (Bureau of
Treasury) and government agencies.

The Commission on Audit serves as the external auditor of the government agencies. It is a
constitutional office and its mandates are provided in Section 2, Art. IX-D of the 1987 Constitution of the
Philippines. The COA examine, audit and settle all accounts pertaining to revenues or receipts and
expenditures or uses of government funds and property, keeps the general accounts of the national
government , prescribes the standard chart of accounts, promulgates accounting rules and regulations
and exercise technical supervision over the accounting functions of each agency. The office is
mandated by the Constitution to submit to the President and the legislative body within the time frame
fixed by law, an annual audit report of the government, its subdivision, agencies and instrumentalities
including government owned or controlled corporations and recommend measures necessary to improve
efficiency and effectiveness.
 The DBM is responsible for the design, preparation, and approval of the accounting systems of
government agencies, determines the accounting and other item of information needed to monitor
budget performance and assess effectiveness of the agency operation. It prescribes the forms,
schedules of submission and other component of reporting system

needed to accomplish and submit the required information. It acts on agencies recommendations for the
modification or changes to prescribed systems for procedures to effect simplicity and/or meet the
requirements of the peculiarities of the agencies concerned. It approves the Agency Budget Matrix and
issues the allotments to agencies in accordance with the approved budget and issues Notice of Cash
Allocation.

The Bureau of Treasury (BTr) performs banking function for the national government. It receives
and keeps government funds, controls the disbursements thereof and maintain accounts of the financial
transactions of national government agencies. It is required to prepare and submit to the COA and
other fiscal activities, a daily statements of cash receipts, disbursements and fund balances in the
National Treasury.

The National Government Agencies (NGAs) consist of various organizational units such as
departments, bureaus, commissions, boards, offices, tribunals, councils, institutions, state colleges or
universities and establishments.

These agencies are required to establish and maintain a system of accounting for their financial
resources and operation in accordance with pertinent rules and regulations. Accounts should be kept in
such details as is necessary to meet the need of agency management and furnish information to fiscal
and control agencies such as COA, DBM and BTr.

BASIC FEATURES AND POLICIES OF NGAS

Accounting Methods
- accrual basis

Agencies tasked by the Constitution with Accounting Responsibility

Commission on Audit (COA) - as mandated by the 1987 Constitution, the COA shall
have the exclusive authority to - do audit and examination, establish audit techniques,
implement accounting rules and regulations, that includes disallowances on the use of
government funds and properties.
Department of Budget and Management (DBM) is the department responsible for
the planning and implementation of the National Budget for the sound utilization of
 government funds in achieving the national governments agenda on reform and growth.
The DBM is tasked to monitor all government allotments and appropriations through
maintenance of registries for better control and monitoring.
Bureau of Treasury (BTs) - the department is the keeper of national funds and
disbursements. It is the lead agency in monitoring transactions affecting the national
government, agencies, and other instrumentalities. It maintains the registry on the
releases by the DBM, as well as the bank transfers between agencies.
Government Agencies would include government instrumentalities like bureaus,
Congress, Judiciary, constitutional bodies and self contained institutions, among others,
which are required to have an accounting division, which are of equal level with that of
other agencies that are tasked to do maintenance of accounts and submit financial
statements on a regular basis.