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
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 Fund clusters

GOVT ACCTG & ACCTG FOR NPOs by:

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 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