The New Government Accounting System (NGAs) was introduced in January 1, 2002 to simplify the recording of government transactions and generate financial statements that are reflective of the government’s true state of affairs.
The old system was done manually and was prone to material errors in recording and journalizing. In addition, the manual system was ineffective in providing financial information in a timely manner, and therefore more difficult to use for decision making.
With computerization, and the adoption of NGAs, recording of transactions became easier and updates to financial reports, faster. What comes out are relevant financial statements that are easy to understand and more reflective of the agency’s operation.
Budget Authorization and Allocation
Under the 1987 Constitution, it was indicated that, “No money shall be paid out of the National Treasury except in pursuant of an appropriation mandated by law”. What this means is that, no government fund will be spent if there is no law authorizing it or a purpose that indicate the manner that it shall be used.
The accounting for budgetary funds starts at the commencement of the General Appropriation Act. The act gives the legal authorization to fund the government projects and to finance government activities for a certain time frame. A detailed run down of expenses and revenues accruing each and every agency is prepared stating the character, purpose, and the detailed cost for each program of government and the expenses needed to run all government organizations.
The budget serves as a framework to allocate funds for each project; hence, a proper accounting of all sources of income and expenses should be reflected in the financial statements to support t...
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...nt shall be observed unless contrary to existing laws and regulations.
Types of Budget
As to Nature
Consists of three types of budget: Annual – covers the budget for one year; Supplemental – adjustment to previous budgets, and; Special – budget that is not included in the Appropriations Act.
As to Basis
Consists of two types of budget: Performance – emphasis is on the program or services of government, and; Line-Item - are routine expenses like salaries, freight, equipment, supplies.,etc.
What is a Balanced Budget?
It is a situation wherein the budget is equal or less than expected revenues. At present, the Philippine National government operates on a deficiency. The optimal situation would be policies of government that would increase revenues and decrease expenses. Funding of government deficit is done presently through local and foreign borrowings.
No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of all public Money shall be published from time to time. (U.S. Constitution, Article 1, Section 9).
What a government borrows to ensure it can finance all its planned expenditure (and plug its budget deficits). If a government is running a budget surplus, it should not in principle need to increase its debt. A government will normally borrow by issuing bonds and other securities. (Ft. 2015)
Specialized budgets are prepared with detailed information in reference to timing and cash flows. Specialized budgets main focus is on a certain asset or activity. For example a tax budget is frequently used to watch activities that are taxable.
“After World War I, such arguments succeeded in rationalizing the budget process under the president’s authority: the 1921 Budget and Accounting Act gave presidents responsibility for overseeing individual agencies budget requires and unified; coordinated executive budget. A new organization, the Bureau of the Budget (BoB), was created within the Treasury Department to serve as the administration’s staff arm in endeavor” (Rudalevige,
(Cronkhite, 2013) All organization requires specific planning and a clear understanding of the organization object. (McHatton, Bradshaw, Gallagher, & Reeves, 2011) With the budgeting which ensures that the funds necessary to carry out the organizational activities and once the budget is approve operational activities are conducted within the approved plan. (Cronkhite, 2013) The Capital budget contains large items since as location or a new building. (Cronkhite, 2013) This type of budgeting is done until the organization or project is complete. (Cronkhite, 2013) Line item budget is those items that are needed yearly in order to the organization to operate. (Cronkhite, 2013) This includes employee salaries all the way down to office basic stationery. (Cronkhite, 2013) The budgeting process is not something that is done once a year; it is a continual process of regular review and in some case possible for revision. (Cronkhite, 2013) In some case a zero based budgeting comes into play. This type of budgeting is also known as the “died of its own weight”. (Cronkhite, 2013) This is only done if there is a reduction in the organization by at 5%, 10% or 20% on how the essential programs would continue to function. (Cronkhite,
A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.
Some people might wonder where all this trillions and trillions of dollars go? Well there are mandatory spending and discretionary spending. It is split up into three classifications, the mandatory, the discretionary, and
Quantitative plans are called budgets. Budgets are prepared to impose cost controls on the activities of an organization (Chenhall, 1986).Budgets are then used to evaluate the performance of the management and budget itself is considered as a standard to evaluate the performance Solomon, 1956). The purpose of the budget is also to implement the strategy of the organization and communicate it to the employees of the organization Rickards (2006). The change in the external environment has led to the change in the budgeting approaches from the initial cash based budgets to the zerio based budgets (Bovaird, 2007).
Performance budgeting encompasses the causal relationship among program funding and the probable results of that program and uses this information as a means to develop an actual budget. A major focal point of performance budgeting is accountability; this type of budgeting is often utilized by administrators to obtain cost efficiency and establish useful budget forecasting.
The purpose of this document is to describe the nature, purpose and scope of accounting and it deliberately explains the details of each category in accounting. Accounting involves in preparing financial documents of an entity by analyzing, verifying, and reporting this records. It emphasizes its major characteristic role in field of banking and finance, with a mixture of supportive sub topics.
Accounting dates back as far as first centuries, is the language of business. As everything has gone through many changes, accounting has also changed many times through out the centuries. It went from the use of abacus to the most advanced softwares, and computers. With these drastic improvements nowadays accounting, financial accounting and management are facing big challenges. From the presentation of the reports to communication to the users, investors, and owners, the accounting field has gained totally a new shape from two decades ago. Today with the dynamic change in every aspect of life, the accounting field has to act fast and be able to adapt these new changes and challenges in order to survive.
It requires an adequate and sound organizational structure, that is, there must be a definite assignment of responsibility for each function of the enterprise. Budgeting compels all the members of management, from the top to bottom to participate in the establishment of goals and plans. Budgeting compels departmental managers to make plans in harmony with the other departments and of the entire enterprise. Budgeting helps the management to put down in figures what is necessary for a satisfactory performance. Budgeting helps the management to plan for the most economical use of labor, material and capital. Budgeting tends to remove the cloud of uncertainty that exists in many organizations, especially among lower levels of management, relative to basic policies and objectives. Budgeting promotes an understanding among members of management of their co-workers' problems. Budgeting force management to give adequate attention to the effects of general business conditions. Budgeting aids in obtaining bank credit as banks commonly require a projection of future operations and cash flows to support
The following essay aims to analyse in depth a computerised accounting system and its aspects such as its history, what technologies is based on, and how it has developed since its beginning. Other aspects such as the current state of the system and the interactions with other systems and the future of the system will also be covered in this paper.
Modern information system is now popular all over the world, it also change the accounting area. Instead of the old manual analysis, many companies making effort in developing a fitted accounting information system for themselves, as they realize the advantages that the new technology brings in - more efficient and accurate in processing, integrated data, detailed record etc. However, even though there are so many benefits, the functional system also brings challenges, making new requirements to the accountants and auditors. This paper will discuss the impact of technology to the accounting information system, as well as the necessary capability ethics that the accountants should learn in this 21th century.
Government entities (tax authorities) need financial statements to ascertain the propriety and accuracy of taxes and other duties declared and paid by a company.