CHAPTER 3

THE
GOVERNMENT
ACCOUNTING
PROCESS
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BOOKS OF
ACCOUNTS AND
REGISTRIES
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Introduction

▸ The government accounting process is similar to that of

a business entity, except that it incorporates budgetary
controls, such as recording in the budget registries and
preparing budget accountability reports.
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Books of Accounts

1. Journals
a. General Journal
b. Cash Receipts Journal
c. Cash Disbursement Journal
d. Check Disbursement Journal

2. Ledgers
a. General Ledgers
b. Subsidiary Ledgers
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Books of Accounts

3. Registries
a. Registries of Revenue and Other Receipts (RROR)
b. Registry of Appropriations and Allotments (RAPAL)
c. Registries of Allotments, Obligations and
Disbursements (RAOD)
d. Registries of Budget, Utilization and Disbursement
(RBUD)
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Books of Accounts

▸ Technically, only the Journals and Ledgers are considered

accounting records. These are similar to the accounting
records of a business entity. The Registries are budget
records. These are used to monitor the budget.
▸ The accounting unit of the agency maintains the Journal and
Ledgers while the budget division of the agency maintains the
Registries.
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Budget Registries

A. Registries of Revenue and Other Receipts (RROR) – used

to monitor the budgeted amounts, actual collections and
remittances of revenue and other receipts.
B. Registry of Appropriations and Allotments (RAPAL) – used
to monitor appropriations and allotments. This is to ensure
that allotments will not exceed appropriations.
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Budget Registries

C. Registries of Allotments, Obligations and Disbursements

(RAOD) – used to monitor the allotments received,
obligations incurred against the corresponding allotment,
and the actual disbursements made. This is to ensure that
obligations incurred will not exceed allotments while actual
disbursements will not exceed the obligations incurred.
Separate RAOD shall be maintained for each object of
expenditure.
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Budget Registries

Object of Expenditure
a. Personnel Services (PS) – pertain to all types of employee benefits
b. Maintenance and Other Operating Expenses (MOOE) – pertain to
various operating expenses other than employee benefits and
financial expenses
c. Financial Expenses (FE) – pertain to finance cost
d. Capital Outlays (CO) – pertain to capitalizable expenditures
Accordingly, the following separate RAODs shall be maintained:
RAOD-PS, RAOD-MOOE, RAOD-FE, and RAOD-CO.
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Budget Registries

4. Registries of Budget Utilization and Disbursements (RBUD) –

Used to record the approved special budget and the corresponding
utilizations and disbursements charged to retained income.
Separate RBUDs are also maintained for each object of
expenditures, i.e., RBUD-PS, RBUD-MOOE, RBUD-FE, RBUD-
CO.
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BASIC
RECORDING
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Appropriation

Entity A receives its GAA consisting of the following:

Personnel Services (PS) 100,000
Maintenance and Other Operating Expenses 60,000
Financial Expenses 0
Capital Outlays (CO) 200,000
Total appropriations for the current year 2023 360,000

The receipts of the appropriation is posted (recorded) in the Registry of

Appropriations and Allotments (RAPAL).
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Allotment

Entity A receives its allotment from the DBM:

Personnel Services (PS) 90,000
Maintenance and Other Operating Expenses 40,000
Financial Expenses 0
Capital Outlays (CO) 170,000
Total allotment 300,000

The receipts of the alloment is posted (recorded) in the RAPAL and Registries
of Allotments, Obligations and Disbursements (RAOD).
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Incurrence of Obligation

▸ Obligation Request and Status (ORS)

▹ Obligations shall be incurred be incurred through the issuance
of ORS. The Requesting Office shall prepare this document,
supported by valid claim documents like disbursement
vouchers, payroll, purchase/job orders, itinerary of travel, etc.
▹ The Head of the Requesting Office shall certify the necessity
and legality of the obligation and the validity of the supporting
documents. The Head of the Budget Division shall certify the
availability of the allotment.
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Incurrence of Obligation

Entity A enters into the following contracts:

a. PS– Employment contracts amounting to 70,000
b. MOOE – Purchase contract for office supplies worth 25,000
c. CO – Purchase contract for office equipment worth 160,000

The ORS are prepared and the obligations are recorded in the
RAOD.
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Incurrence of Obligation

▸ If the obligations recorded in the RAOD and ORS need to be

adjusted, the subsequent adjustment shall made through the use of
the Notice of Obligation Request and Status Adjustment (NORSA).
The adjustment shall be effected through positive entry (addition) or
a negative entry (reduction), as appropriate.
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Incurrence of Obligation

▸ Up to this point, nothing is recorded yet in the accounting books.

The recordings in the previous slides are mode on the budget
registries. Journal entries shall be made only after:
a. The employees have rendered services;
b. The office supplies are delivered and received; and
c. The office equipment is delivered and received
▸ Only after these events occur that the entity’s financial statement
elements are affected, and thus, an accountable event has occurred
that needs to be recognized.
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Incurrence of Obligation

▸ In the meantime, the obligations recorded in the registries (but not

yet in the accounting books) are referred to as “Not yet Due and
Demandable”
Government Entity Business Entity

Obligations is an act of a duly Obligation is another term for

authorized official which binds the liability
government to the immediate or
eventual payment of a sum of
money. Obligations maybe referred
to as commitment that
encompasses possible future
liabilities based on current
contractual agreement.
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Incurrence of Obligation

▸ In the meantime, the obligations recorded in the registries (but not

yet in the accounting books) are referred to as “Not yet Due and
Demandable”
Government Entity Business Entity

Obligations is an act of a duly Obligation is another term for

authorized official which binds the liabiltiy
government to the immediate or
eventual payment of a sum of
money. Obligations maybe referred
to as commitment that
encompasses possible future
liabilities based on current
contractual agreement.
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Disbursement Authority – Notice of Cash Allocation
NCA

Entity A receives Notice of Cash Allocation (NCA) from the DBM amounting
to 200,000 net of cash.
The NCA is posted (recorded) in the RANCA.

The registries used to monitor the NCA are as follows:

a. Registry of Allotments and Notice of Cash Allocation (RANCA) – used to determine
the amount of allotments not coved by NCA and to monitor the available balance of
NCA
b. Registry of Allotment and Notice of Transfer of Allocation(RANTA) – used to
determine the amount of allotments not coved by Notice of Transfer of Allocation
(NTA) and to monitor the available balance of NTA.
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Disbursement Authority – Notice of Cash Allocation
NCA

This time a journal entry shall be made in the accounting books because the
financial statement elements of the entity are now affected
▸ Increase in cash
▸ Increase in revenue
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Journals and Ledgers

JOURNALS
a. General Journal – used to record transactions not recorded in the
special journals
b. Cash Receipts Journal – used to record the Report of Collections
and Deposit and Cash Receipts Register of collecting officers
▹ Report of Collections and Deposits (RCD) – prepared by a collecting officer to
report his/her collections and deposits to Authorized Government Depository
Bank (AGDB).
▹ Cash Receipts Register (CRReg) – Used by field officers without a complete
set of books to record their cash collections and deposits in the books of their
mother unit (central/regional/division office).
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Journals and Ledgers

JOURNALS
c. Cash Disbursement Journal – used to record the cash
disbursements of the Disbursing Officer
d. Check Disbursement Journal – used to record the check
disbursement of the Disbursing Officer
Take note that B, C and D are Special Journals
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Journals and Ledgers

LEDGERS
a. General Ledger – summarizes all transactions recorded in the
journals. Accounts in the general ledger are arraged according to
their sequence in the Revised Chart of Accounts
b. Subsidiary Ledger – show details of each control account in the
general ledger
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Disbursement Authority – Notice of Cash Allocation
NCA

Let’s go back to the sample illustration:

The NCA specifies the maximum amount of withdrawal that an entity can make
from a government back for the period indicated. The Collecting Officer shall
not issue an official receipt (OR) for the receipt of NCA.
- Section 38, Chapter 5 of GAM for NGAs

Since the receipt of the NCA does not constitute a collection that is recordable
in the Cash Receipts Journal, it is recorded in the General Journal. The journal
entry for the NCA is also posted to the General Ledger
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Disbursements

Employees have rendered services and are now entitled to

compensation.
Journal entries shall be made because the financial statements element
of the entity are affected
▸ Increase in expenses
▸ Increase in liability
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Disbursements

1. Set up of payable to officers and employees upon approval of

payroll
Salaries and Wages 35,000
Personal Economic Relief Allowance (PERA) 5,000
Gross Compensation 40,000
Withholding Tax (10,000)
GSIS (2,000)
Pag-ibig (2,000)
PhilHealth (1,000)
Total Deductions (15,000)
Net 25,000
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Disbursements

Salaries and Wages, Regular 35,000

Personal Economic Relief Allowance (PERA) 5,000
Due to BIR 10,000
Due to GSIS 2,000
Due to Pag-ibig 2,000
Due to PhilHealth 1,000
Due to Officers and Employees 25,000
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Disbursements

2. Posting of payable to the Section C of ORS

3. Grant of Cash Advances for Payroll
Advances for Payroll 25,000
Cash-MDS, Regular 25,000
4. Posting of disbursement to the payment column of Section C of the
ORS and disbursement column of the RAOD.
5. Liquidation of Payroll Fund
Due to Officers and Employees 25,000
Advances for Payroll 25,000
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Remittance of Amounts Withheld

Entity A remits the 15,000 withheld to the other government agencies.

Tax 10,000
GSIS 2,000
Pag-ibig 2,000
PhilHealth 1,000
Total 15,000
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Remittance of Withholding Tax

Tax Remittance Advice (TRA)

▸ In the books of the govt agencies, the constructive remittance of
taxes withheld to Bureau of Internal Revenue or customs duties
withheld to the Bureau of Customs, and the constructive receipt of
NCA for those taxes and customs duties;
▸ In the books of the BIR and BOC, the constructive receipt of tax
revenue and customs dutiesl and
▸ In the books of the BTr, the constructive receipt of the taxes and
customs duties remitted.
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Remittance of Withholding Tax

BOOKS OF ENTITY A
Cash-Tax Remittance Advice 10,000
Subsidy from National Govt 10,000

Due to BIR 10,000

Cash- Tax Remittance Advice 10,000
Notice that there is actually no physical tnrasfer of cash to the BIR, thus the term
constructive. The TRA is another form of disbursement authority, thus it is recorded
similarly to the receipt of the regular NCA. This means that Entity A has authority to use
the amount withheld in its operations. Amounts used from the TRA will be reported in the
Entity A’s Monthly Report of Disbursements.
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Remittance of Withholding Tax

The TRA is recorded by the other government agencies

BOOKS OF BIR
Cash-TRA 10,000
Income Tax 10,000

BOOKS OF BTr
Subsidy to NGAs 10,000
Cash-TRA 10,000
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Remittance to GSIS, Pag-ibig, and PhilHealth

BOOKS OF Entity A
Due to GSIS 2,000
Cash-MDS, Regular 2,000

Due to Pag-ibig 2,000

Cash-MDS, Regular 2,000

Due to PhilHealth 1,000

Cash-MDS, Regular 1,000
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Billings, Collections and Remittances

Entity A bills revenue of 100,000 for rent income

Accounts Receivable 100,000
Rent/Lease Income 100,000

Entity A collects 100,000 from the billed revenue and remits the collection to
the BTr
Cash-Collecting Officers 100,000
Accounts Receivable 100,000
Cash-Treasury/Agency Deposit, Regular 100,000
Cash-Collecting Officers 100,000
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Reversion of Unused Notice of Cash Allocation

Government entities are required to revert any NCA at the end of the
accounting period.
Cash-Modified Disbursement System (MDS), Regular

Receipt of NCA 200,000

25,000 Advances for Payroll

5,000 Remittance to GSIS……

Balance, end 170,000

Journal Entry to revert:

Subsidy from National Government 170,000
Cash-MDS, Regular 170,000
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The Revised Chart of Accounts

A chart of accounts is a list of all the accounts used by an entity. Government

entities shall use the accounts titles and account codes in the Revised Chart of
Accounts (RCA) issued by the COA.
Each account in the RCA is assigned an 8-digit code as follows:
0 00 00 00 0 Example 1 01 04 01 0
0 – Account Group 1 – Asset
00 – Major Account Group 01 – Cash and Cash Equivalent
00 – Sub-Major Account Group 04 – Treasury/Agency Cash Accounts
00 – General Ledger Accounts 01 – Cash-MDS, Regular
0 – General Ledger Contra-Accounts 0 – Not a contra account