Module-1 GovtAcctg
Module-1 GovtAcctg
Module # 1
OVERVIEW OF GOVERNMENT ACCOUNTING
September 01, 2020 / 09:00-10:30
Learning Objectives
1. Differentiate government accounting from the accounting for business entities.
2. State the government entities charged with accounting responsibility.
3. Describe briefly the GAM for NGAs.
4. State the basic principles used in government accounting.
5. State the recognition criteria for assets.
Introduction
This module involves discussions on principles and theories about government accounting and
reporting the government transactions using the Philippine Government Accounting Standards
(PGAS) and the New Government Accounting System (NGAS) prescribed by the Commission on
Audit and International Public-Sector Accounting Standards (IPSAS).
Discussion
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)
Objectives of the Government Accounting
a. To produce information concerning past operations and present conditions;
b. To provide a basis for guidance for future operations;
c. To provide for control of the acts of public bodies and offices in the receipt, disposition and
utilization of funds and property; and
d. To report on the financial position and the results of operations of government agencies for
the information and guidance of all persons concerned.
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.
Responsibility, Accountability and Liability over Government Funds and Property
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.
Government resources must be utilized efficiently and effectively in accordance with the law.
Government officials are responsible in implementing this policy, are accountable for the
government resources in their custody, and are liable for any loss.
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
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.
Fund Clusters
Qualitative Characteristics of Financial Reporting
1. Understandability
2. Relevance
3. Materiality
4. Timeliness
5. Reliability
6. Faithful representation
8. Neutrality
9. Prudence
10. Completeness
11. Comparability
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).
The following are indicators of probable inflow of future economic benefits:
a) the chance of benefits arising is more likely rather than less likely (e.g. greater than 50%).
b) benefits can be expected on the basis of available evidence or logic.
The following are indicators of reliable measurement:
a) valuation method is free from material error or bias.
b) faithful representation of the asset’s benefits.
c) reliable information will, without bias or undue error, faithfully represent those
transactions and events.
Summary
Government accounting also aims to demonstrate accountability of the entity for the
resources entrusted to it.
COA, DMB, BTr and other government agencies are those charged with government
responsibility
The GAM for NGAs provides the principles and procedures to be applied in the financial
reporting of government entities.
The basic principles of government accounting are:
Compliance with PPSAS (Philippine Public Sector Accounting Standards) 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 prescribed by COA
Double entry bookkeeping
Financial statements based on accounting and budgetary records
Fund cluster accounting
The 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
Assess Yourself (Multiple Choice)
1. A primary characteristic that distinguishes governmental entities from business entities is
a) The need to generate revenues equal to or in excess of expenditures/expenses.
b) The importance of the budget in the governing process.
c) The need to provide goods or services.
d) The correlation between revenues generated and demand for goods or services.
8. Which of the following is common to both governments and not-for-profit entities but
distinguishes these entities from for-profit entities?
a) The budget is a legal, financial document.
b) Revenues are usually indicative of demand for goods or services.
c) There is direct matching of revenues and expenses.
d) There are no defined ownership interests.
Note: This is not a graded activity; rather, an assessment on how well you understand the topic.
A separate quiz will be announced and given.
Source: Accounting for Government and Non-profit Organizations by Zeus Vernon Millan
Reviewed by:
Approved by:
b, d, c, c, c, a, c, d, c, d