The Manual on the New Government Accounting System replaces the Government Accounting and Auditing Manual (GAAM), Volume II, prescribed under COA Circular No. 91-368, dated December 19, 1991.

On October 30, 2001, based on the authority granted under Sec. 2 (2), Art. IX-D of the 1987 Constitution, COA Circular No. 2001-005 prescribed the use by local government units of the New Government Accounting System (NGAS) effective January 1, 2002 which provide that:

“The Commission on Audit shall have exclusive authority, subject to the limitations in this Article, to define the scope of its audit examination, establish the techniques and methods required therefor, and promulgate accounting and auditing rules and regulation, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of government funds and properties”.

General Accounting Plan - shows the overall accounting cycle in the Local Government Unit. Transactions shall emanate from the different offices / departments of the of the Local Government Units (LGUs).

These offices/ departments will provide/ produce the source documents and other accounting forms leading to the perfection of the transaction whether it be budgetary, collections or disbursements. These source documents and accounting forms shall be the basis for the recording and the preparation of the Financial Statements.

Appropriations – refers to an authorization made by ordinance, directing the payment of goods and services from local government funds under specified conditions or for specific purposes. The local sanggunian approves the annual budget thru the issuance of appropriation ordinance.

Allotments – is the authorization issued by the Local Chief Executive (LCE) to a department /office of the LGU, which allows it to incur obligations, for specified amounts, within the appropriation ordinance. Allotments are released quarterly based on the Work and Financial Plan and Request for Release of Allotment.

Obligations – refer to the amounts committed to be paid by the LGU for any lawful act made by an accountable officer for and in behalf of the local government unit concerned. For each obligation, the requesting department /office shall prepare the Allotment and Obligation Slip (ALOBS) signed by the department or office head as requesting official and forward this together with supporting documents , to the Budget Officer. Per COA Circular No. 2006-02 dated January 31, 2006 ALOBS is now called OBR – Obligation Request.

Accrual Accounting – A modified accrual basis of accounting is used, wherein, all expenses and Income (except where accrual basis is impractical) shall be recognized when incurred.

One fund Concept – As required under Sections 308, 309 and 310 of the Local Government Code, separate books shall be maintained for the General Fund, Special Education Fund and Trust Fund.

Special Accounts in the General Fund Special Accounts, complete with subsidiary ledgers shall also be maintained for the following :

1. Public Utilities and other economic enterprises:

2. Loans , interests, bond issued, and other contributions for specific purposes;

3. Development Projects funded from the Share in the Internal Revenue Collections;

4. Such other special accounts which may be created by law or ordinance.

Chart of Accounts and Account Codes – A three- digit account numbering system is adopted.

Financial Statements – the following statements is prepared monthly, quarterly and annually.

Balance Sheet – shows the financial condition of the Agency at a specific date.

Statement of Income and Expenses – shows the income and expenses of the agency at the end of a particular period.

Statement of Cash Flows – shows the agency’s cash activites.

* Notes to Financial Statement shall accompany year-end reports.

Trial Balance – The two money- column trial balance is used.

Appropriations, Allotments and Obligations - Journal Entry shall no longer be prepared to record the appropriations, receipt of allotments and incurrence of obligations. In lieu of this, separate registries shall be maintained by the Accounting Unit to control the appropriations, allotments and obligations for each classes of expenditures, namely:

1. Registry of Appropriations, Allotments, and Obligations – Capital Outlay ( RAAOCO)

2. Registry of Appropriations, Allotments, and Obligations – Maintenance and Other Operating Expenses (RAAOMO)

3. Registry of Appropriations, Allotments, and Obligations – Personal Services (RAAOPS)

4. Registry of Appropriations, Allotments, and Obligations – Financial Expenses (RAAOFE)

COA Accounting Circular Letter No. 2007-002 dated January 19, 2007, these registries shall be maintained by the City Budget Office.

Now that the importance of technology has been recognized as a tool for industrial and economic development, the Commission on Audit (COA) developed e-NGAS – the computerization of NGAS which encompasses the various accounting processes from recording, to classifying, summarizing and communicating all the financial results. As such, the e-NGAs provides an accurate, on time and standardized financial reports. The Electronic New Government Accounting System complies with the basic policies and procedures of the New Government Accounting System (NGAS).

Automated recording of accounting entries to the general journal, posting to the subsidiary ledger and the general ledger through JEV PREPARATION where accounting entries are created for all types of government transactions and which are generally grouped into cash receipt, cash disbursement and non cash transactions.

There is an automatic checking of balances between debits and credits. Once these JEVs are approved by authorized approving officer, it gets posted to the General Ledger and Subsidiary Ledger.

Adequate security control mechanisms for data integrity and accuracy.

Up-to-date generation of government standard reports necessary for management and auditing purposes

Real- time query of interim reports and documents

User-friendly screen

Simplified entry of financial transactions and activities, using transaction templates

Use of responsibility accounting for a more detailed financial reporting and analysis

It also provides an on-line inquiry of the following:

- Journal Entry Voucher

Expense per Responsibility Center Income per Responsibility Center

Repair History of PPE. Schedule of payable/ receivable accounts

inventory schedule. PPE schedule Schedule of Balance Sheet Accounts Registry of Public Infrastructure Recorded supporting documents

It also has a facility to generate the following reports and records:

Trial Balance

Statement of Income and Expenses

Balance Sheet Statement of Government Equity Statement of Cash Flows

WWW.ACCOUNTINGDAVAO.COM

THE BUDGET CYCLE

PREPARATION

ACCOUNTABILITY

REVIEWEXECUTION

Manual on the New Government Accounting System (For Local Government Units) (Volume I, II and III).

e-NGAS Functional Training Manual.