Government Accounting Manual For NGAs

GOVERNMENT ACCOUNTING MANUAL
for NATIONAL GOVERNMENT AGENCIES

(Salient Features)
The Philippine Association for Government Budget Administration (PAGBA), Inc.

2nd Quarterly Seminar and Meeting
07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City
By:
LUZVI PANGAN CHATTO
Director IV
Accounting Systems Development and Other Services Office
Government Accountancy Sector
Commission on Audit
1
GOVERNMENT ACCOUNTING MANUAL (GAM)
(For National Government Agencies)
Salient Features
Accounting
UACS PPSAS
and other RCA
PFM-related
rules and The Philippine Association for Government Budget
Administration (PAGBA), Inc.
regulations 2nd Quarterly Seminar and Meeting
07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City 2
Presentation Outline
Legal Basis
GAM for NGAs
Objective
Summary of Contents
Changes Adopted
Salient features on select areas:
Revenue
Disbursements
Inventories
Property, Plant and Equipment
Implementation strategy/plan
The Philippine Association for Government Budget
Legal Basis
Article 1X-D, Section 2 par. (2),

1987 Philippine Constitution
Mandates COA to promulgate accounting

rules and regulations

2 Quarterly Seminar and Meeting
nd

4
: a PFM Reform
An activity of the Accounting and Auditing Reforms Project under
the PFM Reform Roadmap
Prepared by a committee supervised by COAs Philippine Public
Sector Accounting Standards Board
Exposed to various stakeholders for comment/recommendation
Funded by a KfW Technical Assistance Fund
Approved by COA Commission Proper, through COA Circular No.
2015-007 dated October 22, 2015
Used effective January 1, 2016 The Philippine Association for Government Budget
Capacity Building activities/Training conducted: 07 July 2016, Seminar
2 Quarterly and Meeting
nd
Pryce Plaza Hotel, Cagayan de Oro City

From October to December 2015 initiated by COA (free)
From January 2016 to present initiated by departments/agencies (customized
training) 5
The Budget Cycle
BUDGET
PREPARATION
BUDGET BUDGET
ACCOUNTABILITY APPROVAL
BUDGET
EXECUTION The Philippine Association for Government Budget
6
Objective of the GAM
Provides updates on the following:

Government Accounting Policies, Guidelines, Standards and
Procedures
Coding Structure and Accounts
Accounting Books, Registries, Records, Forms, Reports and
Financial Statements
Illustrative Accounting Journal Entries

7
Contents of the GAM
Volume I Volume II Volume III
22 Chapters, 19 Annexes,
92 Appendices 3 Chapters
Acronyms
Books, Registries, Records, List of Accounts
Accounting Standards and Forms and Reports
Policies Accounting Codes and
Budget Descriptions of
Treasury
Accounts
Property/Supply Management
Guidelines and Procedures Instructions: How to
Accounting Accomplish the forms,
Budget records, etc.
Treasury
Property/Supply Management
When/Where to Submit
Illustrative Accounting
Entries The Philippine Association for Government Budget
Sample Formats of the FSs 2nd Quarterly Seminar and Meeting
8
Chapters in Volume 1, GAM for NGAs

Chapter 1 - Introduction Chapter 7 - Financial Instruments

Chapter 2 - General Provisions, Basic
Standards and Policies Chapter 8 - Inventories

Chapter 3 - Budget Monitoring and
Reporting Chapter 9 - Investment Property
Chapter 4 Responsibility Accounting Chapter 10 - Property, Plant and

Equipment
Chapter 5 - Revenue and Other

Receipts Chapter 11 - Agriculture
Chapter 6 - Disbursements Chapter 12 - Intangible Assets
GAM for NGAs Slide 9 of 28

Chapters in Volume 1, GAM for NGAs
Chapter 18 - Provisions, Contingent

Chapter 13 - Leases Liabilities and
Contingent Assets
Chapter 14 - Service Concession
Arrangements:

Chapter 19 - Financial Reporting

Grantor
Chapter 15 - Interest in Joint Chapter 20 - Consolidated and

Venture Separate Financial
Statements
Chapter 16 - The Effects of Changes
in Foreign Exchange Chapter 21 - Bank Reconciliation
Rates
Chapter 22 - Illustrative Accounting

Chapter 17 - Borrowing Costs
Entries
GAM for NGAs Slide 10 of 28

Changes Adopted in the GAM
Particulars NGAS Manual GAM
1. New State PPSAS 1-Presentation of Financial Statements
Standards Accounting PPSAS 2-Cash Flow Statements
Standards PPSAS 3-Accounting Policies, Changes in Accounting
Estimates and Errors
PPSAS 4-The Effects of Changes in Foreign Exchange
Rates
PPSAS 5-Borrowing Costs
PPSAS 6 -Consolidated and Separate Financial
Statements
PPSAS 8-Interests in Joint Ventures
PPSAS 9-Revenue from Exchange Transactions
PPSAS 12-Inventoies
PPSAS 13-Leases
11
1. New State PPSAS 14-Events after the Reporting Date
Standards Accounting PPSAS 16-Investment Property
Standards PPSAS 17-Property, Plant and Equipment
PPSAS 19-Provisions, Contingent Liabilities and
Contingent Assets
PPSAS 20-Related Party Disclosures
PPSAS 21-Impairment of Non-Cash Generating Assets
PPSAS 23-Revenue from Non-Exchange Transactions
(Taxes and Transfers)
PPSAS 24-Presentation of Budget Information in
Financial Statements
12
1. New State PPSAS 26-Impairment of Cash-Generating
Standards Accounting Assets
Standards
PPSAS 27-Agriculture
PPSAS 28, 29 and 30-Financial Instruments
(Presentation, Recognition and
Measurement, and Disclosures,
respectively)
PPSAS 31-Intangible Assets
PPSAS 32-Service Concession
The Philippine Association for Government Budget Arrangements: Grantor
13
2. Components of Four Six
FS
3. FS Title 1. Balance Sheet 1. Statement of Financial
Position
2. Statement of Income 2. Statement of Financial
and Expenses Performance
3. Statement of 3. Statement of Changes in Net
Government Equity Assets/Equity
4. Cash Flow Statement 4. Statement of Cash Flow
Additional FSs
5. Statement of Comparison of
The Philippine Association for Government Budget Budget and Actual Amounts
nd 6. Notes to Financial Statements
14
4. Chart of Accounts COA Circular 2004-008, COA Circular 2013-002,
September 20, 2004 January 30, 2013
COA Circular 2014-003,
April 15, 2014
COA Circular 2015-007,
October 22, 2015
5.Unified Accounts None UACS Compliant
Code Structure
(UACS)
6. Books Maintained Regular Agency Book By Fund Cluster
and
National Government
07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City Book 15
NGAS
Particulars GAM
Manual
7. Fund One Fund Fund Clustering
Maintenance Concept 01 - Regular Agency Fund
02 - Foreign-Assisted Projects Fund
03 - Special Accounts-Locally
Funded/Domestic Grants Fund
04 - Special Account-Foreign
Assisted/Foreign Grants Fund
05 - Internally Generated
Funds/Retained Income Fund
06 - Business Related
2nd Quarterly Seminar and Meeting Funds/Revolving Fund
07 - Trust Receipts 16
8. Inventory Costing Moving Weighted Moving Weighted

Average Average;
Specific Identification
9.Estimated Useful Prescribed by COA Ranges prescribed
Lives of PPE by COA
Specific Useful Life
prescribed by
Management
10. PPE Threshold None P15,000 and above
11. Residual value 10% At least 5% 17
12. Cash Flow Direct Method Direct Method
13. Completed Derecognized; recorded Recognized in the books
Public in registry only of accounts
Infrastructures
14. Statement of
Financial Position
Assets Without distinction With Distinction
Current and Non-current
Without distinction With Distinction

Liabilities Current and Non-current
18
15. Accounting for
Donation
with conditionality Income Liability
without conditionality Income Revenue
with restriction - Revenue

19
16. Statement of Financial Form part of Income Not part of Revenue
Performance from Current Operation
Subsidies, Transfers
17. Impairment loss None Recognized

18. Adjustment affecting Uses Prior Years Adjustment Direct adjustment to
Government Equity account Equity
19. Recognition of Income Without authority to use-BTr Recognized by NGAs

Collection With authority to use-NGAs
20
(Budget)
1. Maintenance of Registries Registry of Allotments and Registry of Allotments, Obligations
Obligations (RAO) and Disbursements (RAOD)
RAOPS, RAOMOOE, (RAODPS, RAODMO, RAODCO,
RAOCO, RAOFE RAODFE)
RBU RBUDPS, RBUDMOOE,

RBUDCO, RBUDFE
RAPAL (COA-GAS only) RAPAL (COA-GAS and agencies)
Registry of Revenue and None New
other Receipts
2.Statement of Comparison of None Additional component of FS
Budget and Actual
Amounts
3. Monitoring of None Section C of Obligation Request
Obligation/Payment and Status (ORS)
21
(Budget)
4. Forms Obligation Request Obligation Request and
(ObR) Status (ORS)
Notice of Obligation Request
None and Status Adjustment
(NORSA)
Budget Utilization Budget Utilization Request
Request (BUR) and Status (BURS)
Notice of Budget Utilization
None Request and Status
Adjustment (NBURSA)
22
Section C of the Obligation Request and Status (ORS)
a b c a-b b-c
(a) Obligation
(b) Payable
Delivery Receipt/JEV
(c) Payment
RCI/JEV
(a-b) Not yet due
(b-c) due and

demandable
23
Budget and Financial Accountability Reports
(BFARs)
(COA-DBM-DOF Joint Circular No. 2013-1, as amended by
COA-DBM Joint Circular No. 2014-1 dated July 2, 2014)
Quarterly Physical Report of Operation (QPRO)-BAR No. 1

Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances (SAAODB)-FAR No. 1
Summary of Appropriations, Allotments, Obligations,
Disbursements and Balances by Object of Expenditures
(SAAODBOE)-FAR No.1-A
(BFARs)
List of Allotments and Sub-Allotments(LASA)-FAR No. 1-B

Statement of Approved Budget, Utilizations, Disbursements
and Balances(SABUDB)-FAR No. 2 (for Off-Budget Fund)
Summary of Approved Budget, Utilizations, Disbursements
and Balances by Object of Expenditures(SABUDBOE)-
FAR No. 2-A (for Off-Budget Fund)
nd

25
(BFARs)
Aging of Due and Demandable Obligations(ADDO)-FAR No. 3

Monthly Report of Disbursements(MRD)-FAR No. 4
Quarterly Report of Revenue and Other Receipts (QRROR)-
FAR No. 5

nd

26
Responsibility Accounting - a system that measures
the plans (by budgets) and actions (by actual results)
of each responsibility center
Responsibility Center - a part, segment, unit or

function of a government agency, headed by a
manager, who is accountable for a specified set of
activities

nd

27
Objectives of Responsibility Accounting
Charge/Credit all costs and revenues to the correct

responsibility center
Provide basis for making decisions for future operations
Facilitate review activities
Monitor performance of each responsibility center
Facilitate evaluation of effectiveness of agencys
operations

nd

28
REVENUE SOURCES
Exchange Non-Exchange
Transactions Transactions
Tax Revenue
Sale of Goods
Fines and
Penalties
Provisions of
Services Shares, Grants
and Donations
Use by others of Present obligation
entity assets recognized as a
liability is satisfied
nd

29
OTHER RECEIPTS
Notice of Cash Allocation

Non-cash Availment Authority
Cash Disbursement Ceiling
Tax Remittance Advice
Subsidy/Assistance from other NGAs, LGUs, GCs
and Other Funds
Refund of Cash Advances
Performance bond/security deposits
Refund of overpayment of expenses
Collections made on behalf of another entity or non-government/private
organizations
Intra-agency and inter-agency transfers The Philippine Association for Government Budget
30
RECOGNITION
Exchange Transactions
Future economic benefits or service potential flow to the

entity
Such benefits can be measured reliably
Non-Exchange Transactions
When collected
Measurable and legally collectible
nd

31
RECOGNITION
(Exchange Transactions)
Sale of Goods
Transfer of Provisions of Services
significant risks and
rewards of Straight-line Use by others of entity
ownership of the basis over the
goods.
assets
specified period
Retains neither of the services. Interest effective yield on
managerial Stage of the asset
involvement nor completion of Royalties as earned
effective control the transaction
over the goods at the reporting Dividends right to receive
sold. date. payment is established
32
RECOGNITION
(Non-Exchange Transactions)
The cash basis of accounting shall be applied by all

government agencies until a reliable model of
measurement is developed.
Taxation Revenue future economic

determined at gross benefits or service
amount potential flow to the
entity
Gifts and Donations (other
than services in kind)
Fair value of the
Goods in-kind without assets can be
condition recognized measured reliably
immediately as received
33
Recognition Criteria of Asset through Transfers
An entity shall recognize an asset in respect of transfers when :
1. The transferred resources meet the definition of an asset.
Transfers meet the definition of an asset when the entity controls the
resources as a result of past event (the transfer), and expects to receive
future economic benefits or service potential from those resources.
2. Transfers satisfy the criteria for recognition as an asset
Transfers satisfy the criteria for recognition as an asset when it is

probable that the inflow of resources will occur, and their fair value
can be reliably measured.
nd

34
Basic Requirements for Disbursements and the Required
Certifications
Necessity and legality of charges to allotments

as well as the validity, propriety and legality of
supporting documents certified by the Head of
the Requesting Unit;
Availability of allotment/budget for obligation/

utilization certified by the Budget Officer/Head of
Budget Unit;
nd

35
Certifications
Legality of the transactions and conformity with

existing rules and regulations certified by the
requesting and approving officials;
Availability of cash and completeness of

supporting documents certified by the Chief
Accountant;

nd

36
Certifications
Approval of the disbursement by the Head of

Agency or by his duly authorized representative;
and
Availability of funds certified by the Chief

Accountant.

nd

37
Disbursement Authority
NTA NCAA TRA CDC

NCA
Different Modes of Disbursements
5. Working 6. Direct
1. Check 2. Cash 3. ADA 4. TRA Payment
7. CPCS
Fund/CDC

nd

38
INVENTORIES
Classifications of Inventories
For For For

Manufacturing For Sale
Distribution Consumption

nd

39
MEASUREMENT OF INVENTORIES
Lower of
Lower of
FV at the cost and
cost and net
date of current
realizable
acquisition replacement
value
cost
Inventories measured Except Non-exchange Held for distribution at no

charge or for a nominal
charge
nd

40
COST OF INVENTORIES
a. Costs of b. Costs of
Purchase Conversion
Purchase price Direct labor
Import duties
Materials and
and other taxes
Transport,
The Philippine Association for Government Budget handling and
Administration (PAGBA), Inc. other attributable Overhead
nd
07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City cost

41
Example of costs excluded from the cost of
inventories
wasted
materials, Storage Administrative Selling
labor, or cost overheads cost
overhead

nd

42
METHODS OF ACCOUNTING FOR INVENTORIES
Perpetual inventory
Continually records all the changes in inventory
Use of Supplies Ledger Card-by the Accounting Unit
Use of Stock Card by the Supply Unit
Periodic inventory
All acquisition are recognized by debits to purchases
nd

43
Property, Plant and Equipment - Definition
TANGIBLE ASSETS
purchased, constructed, held for:

developed or otherwise 1) use in the production or
acquired supply of goods or services
2) rental to others
3) administrative purposes
expected to be used during not intended for resale in the

more than one reporting period ordinary course of operations

nd

44
Criteria for Recognizing PPE
future economic benefits or service potential
will flow to the entity
cost or fair value can be measured reliably
beneficial ownership and control rest with the

entity
used to achieve government objectives
meets the capitalization threshold of

P15,000.00
nd

45
Policies on the Application of the
P15,000.00 Threshold
minimum cost of the individual asset
individual items below the threshold but

work together as one network of asset, the
amount exceeds the threshold
the P15,000 shall not be applied to the

aggregate value of PPE acquired in bulk

nd

46
Measurement at Recognition
Initial Cost
Cost
Subsequent Cost
OR
Fair Value
nd

47
ELEMENTS OF COST
Initial estimate of
Purchase price dismantling and
removing the item and
restoring the site
Examples: employee benefits, site

Directly attributable cost preparation, delivery and handling cost,
installation and assembly cost, testing cost,
professional feesE 48
Computation of Cost of PPE with
Dismantling Cost
Medical Equipment
Purchase Price P1,000,000

Freight Cost P15,000
Dismantling Cost P80,000 at the end of its five-year
useful life

nd

49
Computation of Cost
Date of purchase Jan. 2, 2014

Purchase Price P1,000,000
Freight Cost 15,000
PV of Dismantling Cost
(P80,000 x 0.62092*) 49,674
Total Cost P1,064,674
* The average borrowing rate at the time of acquisition is 10%

nd

50
Accounting Entry
Medical Equipment Account Dr. Cr.

Code
Medical Equipment 10605110 1,064,674

Cash, MDS, Regular 10104040 1,015,000
Other Provisions 20601990 49,674
To recognize the purchase of medical equipment.

nd

51
Additional Criteria for Infrastructure Assets
Part of a system or network
Specialized in nature and do not have alternative uses
Immovable
May be subject to constraints on disposal

nd

52
Heritage Assets
Their value in cultural, environmental,
educational, and historical terms is
unlikely to be fully reflected in a financial
value based purely on market price
Legal and/or statutory obligations may
impose prohibitions or severe
restrictions on disposal by sale
Irreplaceable and their value may
increase over time even if their physical
condition deteriorates
Difficult to estimate their useful life,
which in some cases could be several
hundred years
53
Heritage Assets
Measurement cost or, if acquired thru non-exchange

transactions, at fair value
Depreciation shall not be recognized
Subject to impairment
Fair value, if measurable, shall be disclosed
If used as PPE (like historic building used as office),
measure as other items of PPE

nd

54
Recording and Monitoring
of Heritage Assets
Registry of Heritage Assets (RHA)
To record and monitor Heritage Assets not recognized in the
books of accounts
To be maintained by Accounting Unit
By fund cluster and in perpetual manner
Registry of Heritage Assets Summary (RHAS)
To summarize cost of specific heritage assets recorded in RHA
To be maintained by Accounting Unit
By fund cluster and in perpetual manner
nd

55
Subsequent Cost
Repairs and Maintenance
Betterments
Additions and Rearrangements

nd

56
Repairs and Maintenance
Repairs and maintenance primarily maintain or
improve the functionality and capacity of the PPE;
increase its service life; improve the quality of its
output; or reduce the operating cost.
Minor repairs shall be directly charged to expense
account Repairs and Maintenance of the specific
PPE
Major repairs shall be added to the carrying amount
of the PPE and shall be depreciated over the
remaining life of the PPE.
Where cost cannot easily be differentiated between a
minor or major repair, it shall be treated as expense.
The Philippine Association for Government Budget (Sec. 24, Chapter 10, Volume I of GAM for NGAs)
Spare Parts
Spare parts and servicing equipment carried as

inventory shall be recognized in surplus or deficit as
consumed.
However, major spare parts and stand-by equipment
qualify as PPE when an entity expects to use them
during more than one period.
Similarly, if the spare parts and servicing equipment
can be used only in connection with an item of PPE,
they are accounted for as PPE
58
Replacement/Resurfacing
Parts of some items of PPE may require recurring

replacement such as a road needing resurfacing
every few years or non-recurring replacement such
as replacing the interior walls of a building.
Under the recognition principle, an entity recognizes
in the carrying amount of an item of PPE the cost of
replacing part of such an item when that cost is
incurred if the recognition criteria are met.
The carrying amount of those parts that are
replaced is derecognized.
59
Betterments
- enhancements to the future economic benefits
or service potential of a capital asset, such as:
a. an increase in the previously assessed
physical output or service capacity;
b. a reduction in associated operating costs;
c. an extension of the estimated useful life; or
d. an improvement in the quality of output.
(Sec. 25, Chapter 10, Volume I of GAM for NGAs)
nd

60
Betterment
Capitalize, if it meets the criteria of PPE
If not, expense
If it enhances the future economic benefits or service
potential but will not increase estimated useful life, the
depreciation period shall remain the same.
If it increases the estimated useful life, its useful life shall be
changed. The revised depreciation period shall not exceed
the estimated useful life of that capital asset.
If it involves replacement of an identifiable component of a
capital asset, derecognize the replace part.
The Philippine Association for Government Budget (Sec. 25, Chapter 10, Volume I of GAM for NGAs)
nd

61
Additions
Additions or modifications which increase the physical
size or function of the PPE should be capitalized.
o entirely new unit and expansion, and
o enlargement or extension of the old asset.
The cost of an addition which is a new unit is
depreciated over its useful life.
The cost of an expansion shall be depreciated over its
useful life or remaining life of the PPE of which it is
part, whichever is shorter.
Administration (PAGBA), Inc. (Sec. 25, Chapter 10, Volume I of GAM for NGAs)
62
Rearrangements
moving cost, reinstallation cost or
relocation cost.
- Cost in moving an asset from one location to another that will
benefit future periods but do not represent additions, replacements
or improvements.
- relocation or reinstallation of an asset which proves to be less
efficient in its original location
Capitalized and amortized over the remaining life of the asset for
which it pertains.
Undepreciated amount of the original installation cost -expensed
and the pertinent accumulated depreciation accordingly
derecognized.
(Sec. 25, Chapter 10, Volume I of GAM for NGAs)
nd

63
Construction
Contract Administration
Labor and materials in
Construction-in- Progress
compliance with RA 9184
Transferred to proper
asset account
nd

64
Exchange Transactions
Lets trade this guy Acquisition of PPE in exchange for a

for a new printer! non-monetary assets, or a
combination of monetary and non-
monetary assets
Measurement of PPE:
a. Fair value of the asset received or if not
available, the fair value of the asset given up
b. if the fair value of the asset received or
given up cannot be measured reliably, the
carrying amount of asset given up
nd

65
Non-exchange Transactions
Measured at Fair value at the date of acquisition
Donation without Condition

shall be measured at its fair value at the date of acquisition
directly recognized as Income from Grants and Donations in Kind
Donation with Condition

a liability account shall be recognized until the conditions or restrictions have been fulfilled
Grants
Assistance in the form of transfer of resources, in cash or in kind from other of government,
private sectors or international institutions
Intra-agency transfers
transfer from Central Office to Regional Offices/Staff Bureaus or vice versa
Inter-agency transfers
transfer from one government entity to another government entity
66
Measurement after Recognition
Cost Model
Less accumulated Less accumulated
Cost
depreciation impairment loss

nd

67
Policies Applicable to Depreciation of PPE
All PPE shall be depreciated except land and not

recognized heritage assets
Depreciation begins when the asset is available for use, if
availability is on or before the 15th of the month, record
depreciation during the month, if after the 15th of the
month, depreciation shall be for the succeeding month
Adopt straight line method of depreciation
Estimation of the useful life of the asset is a matter of
judgment based on the experience of the entity
68
PPE Shall be Depreciated over the Following Life Spans
Property, Plant and Equipment Estimated Useful Life

Land Improvements useful life of the asset to which the
improvement was made
Infrastructure Assets 20 to 50 years
Buildings and Other Structures 30 to 50 years
Machinery and Equipment 5 to 15 years
Transportation Equipment:
Motor vehicles 5 to 15 years
Motor vehicles (Military vehicles) 3 to 20 years
Trains 10 to 20 years
Aircrafts and Aircrafts Ground Equipment 10 to 20 years
69
PPE Shall be Depreciated over the Following Life Spans
Property, Plant and Equipment Estimated Useful Life

Watercrafts 10 to 25 years
Furniture, Fixtures and Books 2 to 15 years
Leased Assets, excluding Land useful life of the leased asset or the lease
term, whichever is shorter.
Leased Assets Improvements useful life of the improvement or the lease
term, whichever is shorter.
Service Concession Assets useful life of the service concession asset or
the term of the service concession
arrangement, whichever is shorter.
Other Property, Plant and Equipment 2 to 15 years

nd

70
Policies applicable to depreciation of PPE
Residual value is at least 5% of the cost

Estimated useful life and residual value shall be reviewed
on a regular basis and revised if a change is clearly
demonstrated
Depreciation is recorded as a debit to Depreciation
Expense and a credit to Accumulated Depreciation
Each part of a PPE with a cost that is significant to the
total cost shall be recorded and depreciated separately
Computation of depreciation shall be cost less residual
value over the estimated useful life
nd

71
IMPAIRMENT OF NON-CASH/CASH GENERATING ASSETS
1.At each reporting date, assess whether there is an

indication that an asset is impaired. I
2.If there is indication of impairment, determine the RSA/
RA.
3.Compare the RSA/SA with the CA (net of accumulated
depreciation and accumulated impairment losses). If
the CA is higher than RSA/SA, the difference is the
estimated impairment loss. On the other hand, if the
RSA/SA is higher than the CA, no impairment loss
shall be recognized.
72
Impairment
Impairment is a loss in the future economic benefits or service
potential of an asset, over and above the systematic recognition
through depreciation.
RSA
Impairment (NCGA)
Carrying
or
Loss Amount RA
(CGA)
Cost Accumulated
Fair value less Cost to
Depreciation and
sell and Value in Use
Accumulated
whichever is higher
Impairment Loss
nd

73
COMPUTATION OF IMPAIRMENT LOSS
Non-Cash Generating Asset Cash Generating Asset
Value in Use = PV of Value in Use = PV

NCGA remaining service of CGA future cash flows
Potential

nd

74
ILLUSTRATIVE EXAMPLE
IT Equipment P350,000.00
Accumulated Depreciation 126,000.00
Carrying Amount (as of 12-31-13) P224,000.00
Value in Use P180,000.00
Fair Value of IT Equipment Less Cost to P200,000.00

Sell
nd

75
ILLUSTRATIVE
EXAMPLE
Carrying Amount P224,000.00

Less: Recoverable service amount (Fair
Value less cost to sell)
200,000.00
Impairment Loss P 24,000.00

nd

76
Impairment - Recognition
Impairment loss is recognized in the financial

statement as an expense.
After the recognition of an impairment loss, the

depreciation charge for the asset shall be adjusted in
future periods to allocate the assets revised carrying
amount, less its residual value, on a systematic basis
over its remaining useful life.
nd

77
REVERSAL OF IMPAIRMENT LOSS
Assess existence of impairment loss recognized in

prior periods
If impairment no longer exists or has decreased,
estimate the RSA / RA of the PPE
A reversal of an impairment loss of an asset shall be
recognized immediately in surplus or deficit

nd

78
Idle, Unserviceable and Fully Depreciated PPE
does not preclude depreciating the PPE
future benefits are consumed not only
Idle through usage but also through
obsolescence, and wear and tear
no longer capable of providing future economic

benefits or service potential
Unserviceable
reported in the IIRUP
dropped from the books by debiting Impairment Loss
PPE (net of cost of the PPE less Accumulated
Depreciation)
carrying amount is equal to zero, or the carrying
amount is equal to residual value
Fully
Depreciated fully depreciated assets remaining in service and
the related accumulated depreciation shall not be
removed from the accounts.
79
GAM Implementation Strategy
Prepared courseware for uniformity in capacity

building/training
Created and Trained Pool of GAM Trainers
Provision of technical assistance to users

nd

80
Capacity Building of users from October to December

2015, and 1st seminar of 2016 :
Regular courses:
o Trained 1,577 COA Officials and auditors/personnel and Accounting, Budget,
Treasury and other Finance officials/personnel of NGAs as of December 31,
2015
Customized training:
o Trained Accounting, Budget, Treasury and other Finance officials/personnel of
NGAs

nd

81
Continuous updating of the GAM through

issuance of pertinent COA rules and regulations,
as necessary

nd

82
nd

83

Government Accounting Manual For NGAs

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Government Accounting Manual For NGAs

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GOVERNMENT ACCOUNTING MANUAL

for NATIONAL GOVERNMENT AGENCIES

The Philippine Association for Government Budget Administration (PAGBA), Inc.

Article 1X-D, Section 2 par. (2),

Mandates COA to promulgate accounting

The Philippine Association for Government Budget

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

Pryce Plaza Hotel, Cagayan de Oro City

Provides updates on the following:

The Philippine Association for Government Budget

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

The Philippine Association for Government Budget

2nd Quarterly Seminar and Meeting

Chapter 4 Responsibility Accounting Chapter 10 - Property, Plant and

Chapter 5 - Revenue and Other

Chapter 6 - Disbursements Chapter 12 - Intangible Assets

GAM for NGAs Slide 9 of 28

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

2nd Quarterly Seminar and Meeting

Administration (PAGBA), Inc.

Chapter 15 - Interest in Joint Chapter 20 - Consolidated and

Chapter 22 - Illustrative Accounting

GAM for NGAs Slide 10 of 28

8. Inventory Costing Moving Weighted Moving Weighted

Without distinction With Distinction

The Philippine Association for Government Budget

17. Impairment loss None Recognized

19. Recognition of Income Without authority to use-BTr Recognized by NGAs

RBU RBUDPS, RBUDMOOE,

(b-c) due and

Quarterly Physical Report of Operation (QPRO)-BAR No. 1

List of Allotments and Sub-Allotments(LASA)-FAR No. 1-B

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

Aging of Due and Demandable Obligations(ADDO)-FAR No. 3

The Philippine Association for Government Budget

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

Responsibility Center - a part, segment, unit or

The Philippine Association for Government Budget

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

Charge/Credit all costs and revenues to the correct

The Philippine Association for Government Budget

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

Notice of Cash Allocation

Future economic benefits or service potential flow to the

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

The cash basis of accounting shall be applied by all

Taxation Revenue future economic

An entity shall recognize an asset in respect of transfers when :

1. The transferred resources meet the definition of an asset.

2. Transfers satisfy the criteria for recognition as an asset

Transfers satisfy the criteria for recognition as an asset when it is

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

Necessity and legality of charges to allotments

Availability of allotment/budget for obligation/

07 July 2016, Pryce Plaza Hotel, Cagayan de Oro City

Legality of the transactions and conformity with

Availability of cash and completeness of