Topic 2.1 Budget Process Budget Prepartion Budget Legislation

Topic 2.
1
THE BUDGET PROCESS
The National Budget
 Government accounting is primarily budgetary

accounting. Government accounting does not only aim
to provide information on past events and transactions
but also budget information. (PPSAS 24)
 Government accounting is concerned with providing

information useful in assessing the conformance of
utilizations of government funds with the approved
budget.
The National Budget
 The national budget (government budget) is the

government’s estimate of the sources and uses of
government funds within a fiscal year. This forms the
basis for expenditures and is the government’s key
instrument for promoting its socio-economic objectives.
The National Budget Cycle
THE BUDGET PREPARATION
The budget preparation in the Philippines uses a “bottom-
up” approach. Under “bottom-up” budgeting, several parties
participate in the budget preparation, starting from the
lowest to the highest levels of the government. Government
agencies are also tasked to increase the participation of
citizen-stakeholders in the budget preparation.
The opposite of “bottom-up” budgeting is “top-down”

budgeting – wherein the
budget preparation starts from the agency heads.
1. BUDGET CALL
➢ The budget preparation starts when the
Department of Budget and Management (DBM)
issues a Budget Call to all government agencies.
➢ The budget call contains among other things, the

next fiscal year’s target, the agency’s budget ceiling
and the other guidelines in the completion and
submission of agency budget proposals.
1. BUDGET CALL: Types of Budget Terms
• Balanced budget – prepared in such a way that
estimated revenues exceed estimated expenditures. If
actual revenues exceed actual expenditures, the
government earns a surplus. If expenditures exceed
revenues, the government incurs a deficit.
• Annual budget – covers a period of one year and

forms the basis for the annual appropriation.
• Special budget – provides for the items not

adequately covered or not included in the general
appropriation act.
1. BUDGET CALL: Types of Budget Terms
• Line item budget – focuses on specific expenditures

such as salaries and wages, travel expenses, freight,
supplies, materials and equipment.
• Performance budget – a plan of activities to be
undertaken, including their related costs, with the
emphasis on meeting targets and desired results. The
main focus is on the work to be done or services to be
rendered.
• Obligations budget – focuses on expenditures
incurred in the current year which are to be paid
either in the same year or in the following year.
2. BUDGET HEARINGS
➢ Budget hearings are conducted after the agencies
submit their budget proposals
➢ Each agency defends its budget proposal before the

DBM. The DBM deliberates on the budget proposals,
makes recommendations, and consolidates the
deliberated proposals into the National Expenditure
Program (NEP) and Budget of Expenditures and
Sources of Financing (BESF).
➢ The DBM then submits the proposed budget to the

president.
3. PRESENTATION TO THE OFFICE OF
THE PRESIDENT
➢ The President and Cabinet members review the
proposed budget.
➢ After the President approves the proposed budget,

the DBM finalizes the budget documents to be
submitted to the Congress.
➢ At this point, the proposed budget is referred to as

the “President’s Budget.”
3. PRESENTATION TO THE OFFICE OF THE PRESIDENT:
PRESIDENT’S BUDGET CONTENT
➢ The “Presidents Budget” contains the following documents which are

intended to assist the Congress in their review and deliberation of the
proposed national budget:
a. President’s Budget Message – this contains the President’s
explanation of the country’s fiscal policy and budget
priorities.
b. National Expenditure Program (NEP) – this contains the
details of all the government entities’ proposed expenditures
in the coming year.
c. Budget of Expenditures and Sources of Financing (BESF) –
this contains the estimated expenditures accompanied by
estimates of expected sources of financing.
d. Other documents aimed to provide further explanation of
selected items in the NEP (e.g., details of key programs and
projects and staffing summary).
THE BUDGET LEGISLATION
Government funds shall only be spent in pursuance of an appropriation made
by law. Therefore, due process must be undertaken to legalize the proposed
budget.
4. House Deliberations
Upon receipt of the President’s Budget, the

House of Representatives conducts hearings to
scrutinize the various agencies’ respective
proposed programs and expenditures.
Thereafter, the House of Representatives
prepares the General Appropriations Bill
(GAB).
5. Senate Deliberations
The Senate conducts its own deliberations on

the GAB. These normally start after the
Senate receives the GAB from the House of
Representatives. However, for expediency,
hearings in the Senate start even as
Representatives deliberations are ongoing.
6. Bicameral Deliberations
After deliberations in both houses are finished, a

committee called the Bicameral Conference
Committee is formed to harmonized any conflicts
between the Representatives and Senate versions of
the GAB.
➢ The harmonized GAB (‘Bicam’ version) is submitted
back to both Houses for ratification. After ratification,
the final GAB is submitted to the President for
enactment.
7. President’s Enactment
The President enacts the budget, which

is now known as the General
Appropriations Act (GAA). Before
enactment though, the President may
exercise his veto power as conferred to
him under the Philippine Constitution.
THE APPROVED BUDGET
THE UNIFIED ACCOUNTS CODE
STRUCTURE (UACS)
The Unified Accounts Code Structure (UACS) refers to

the standard coding system used in financial
reporting of the National Government.
Appropriation – is the authorization made by a

legislative body to allocate funds for purposes
specified by the legislative or similar authority.
THE UNIFIED ACCOUNTS CODE
STRUCTURE (UACS)
1. New General Appropriations – are annual authorizations for incurring
obligations during a specified budget year, as listed in the GAA.
2. Continuing Appropriations – are the authorizations to support

obligations for a specific purpose or project, such as multi-year
construction projects which require the incurrence of obligations even
beyond the budget year.
3. 3. Supplemental Appropriations – are additional appropriations

authorized by law to augment the original appropriations which
approved to be insufficient for their intended purpose due to economic,
political or social conditions supported by a Certification of Availability
of Funds from the BTr.
THE UNIFIED ACCOUNTS CODE STRUCTURE (UACS)
4. Automatic Appropriations – are the authorizations programmed annually or for some other
period prescribed by law which do not require periodic action by Congress.
5. Unprogrammed Funds – are standby appropriations authorized by Congress in the annual

GAA which may be availed only when any of the following instances occur:
a. revenue collections exceed the original revenue targets in the Budget of Expenditures
and Sources of Financing (BESF) submitted by the President to the Congress;
b. new revenues are collected or realized from sources not originally considered in the
BESF; or
c. newly approved loans for foreign-assisted projects are secured or when conditions are
triggered for other sources of funds such as perfected loan agreements for foreign
assisted projects.
THE UNIFIED ACCOUNTS CODE STRUCTURE (UACS)
6. Retained Income/Funds – collections which are authorized by law to be used directly by

agencies concerned for their operation or specific purposes.
7. Revolving Funds – receipts derived from business-type activities of departments/agencies

which are authorized by law to be constituted as such and deposited in an authorized
government depository bank. These funds shall be self-liquidating and all obligations and
expenditures incurred by virtue of said business-type activity shall be charged against said
fund.
8. Trust Receipts – receipts by any government agency acting as trustee, agent or

administration for the fulfillment of some obligations or conditions.

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Topic 2.

 Government accounting is primarily budgetary

 Government accounting is concerned with providing

 The national budget (government budget) is the

The opposite of “bottom-up” budgeting is “top-down”

➢ The budget call contains among other things, the

• Annual budget – covers a period of one year and

• Special budget – provides for the items not

• Line item budget – focuses on specific expenditures

➢ Each agency defends its budget proposal before the

➢ The DBM then submits the proposed budget to the

➢ After the President approves the proposed budget,

➢ At this point, the proposed budget is referred to as

➢ The “Presidents Budget” contains the following documents which are

Upon receipt of the President’s Budget, the

The Senate conducts its own deliberations on

After deliberations in both houses are finished, a

The President enacts the budget, which

The Unified Accounts Code Structure (UACS) refers to

Appropriation – is the authorization made by a

2. Continuing Appropriations – are the authorizations to support

3. 3. Supplemental Appropriations – are additional appropriations

5. Unprogrammed Funds – are standby appropriations authorized by Congress in the annual

6. Retained Income/Funds – collections which are authorized by law to be used directly by

7. Revolving Funds – receipts derived from business-type activities of departments/agencies

8. Trust Receipts – receipts by any government agency acting as trustee, agent or

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