2. Topic Outline
The Philippine Tax System :Roles of
Bureau of Internal Revenue and
Bureau of Customs
Financing Philippine National
Government, Local
Government, Public Corporations
Processes, Methods and Patterns
of Public Expenditures
3. What is Taxation?
A system of raising money to finance government. All governments
require payments of money—taxes—from people.
What is Revenue?
It is a government income.
the income of a government from all sources, used to pay
for a nation's expenses.
Major Source of Revenue :
Tax of Transfer of Real Property Ownership
Tax on Business of Printing & Publication
Franchise Tax
Tax on Sand, Gravel and other Quarry Resources
Professional Tax Amusement Tax
Annual Fixed Tax
4. Characteristics of a Tax
1. It is an enforced contribution;
2. It is generally payable in money;
3. It is proportionate in character;
4. It is levied on persons, property, or the exercise of
a right or privilege;
5. It is levied by the State, which has jurisdiction
over the subject or object of taxation;
6. It is levied by the lawmaking body of the State;
and
7. It is commonly required to be paid at regular
periods or intervals.
5. PURPOSES and BASES of taxation
• State or government’s purpose – needs finances for social
goods and services
• Resources – needed to support the operations of the
government
• Development – as an instrument for directing the
economy towards prosperity
– capital formation
– allocation of resources
– redistribution of income and wealth
• economic stability
6. Organizational Overview
Financial Administrator
Department of
Finance (DOF)
Bureau of Bureau of Local
Bureau of Bureau of the
Internal Government
Customs (BOC) Treasury (BTr)
Revenue (BIR) Finance (BLGF)
Major Tax Collecting Agencies
7. Department of Finance
Bureaus
Bureau of Internal Revenue (BIR)
Bureau of Customs (BOC)
Bureau of the Treasury (BTr)
Bureau of Local Government Finance (BLGF)
Offices
Privatization and Management Office (PMO)
Agencies and Corporations
Insurance Commission (IC)
National Tax Research Center (NTRC)
Central Board of Assessment Appeal (CBAA)
Philippine Deposit Insurance Corporation (PDIC)
Philippine Export-Import Credit Agency (PHILEXIM)
Government Service Insurance System (GSIS)
Social Security System (SSS)
Public Estates Authority (PEA)
Cooperative Development Authority (CDA)
8. Philippine Tax Structure
Corporate Tax in Philippines
a tax that must be paid by a corporation based on the amount of
profit generated.
Capital Gains Tax in Philippines
a tax imposed on the gains presumed to have been realized by the
seller from the sale, exchange, or other disposition of capital assets located
in the Philippines, including pacto de retro sales and other forms of
conditional sale.
Customs Duty in Philippines
a tax levied on imports (and sometimes on exports) by the customs
authorities of a country to raise state revenue, and/or to protect domestic
industries from more efficient or predatory competitors from abroad.
9. Income Tax in Philippines
a tax on a person's income, emoluments, profits arising from
property, practice of profession, conduct of trade or business or on the
pertinent items of gross income specified in the Tax Code of 1997 less
the deductions and/or personal and additional exemptions, if any,
authorized for such types of income, by the Tax Code or other special
laws.
Percentage Tax in Philippines
is a business tax imposed on persons or entities who sell or
lease goods, properties or services in the course of trade or business
whose gross annual sales and/or receipts do not exceed Peso 750,000
and who are not Value Added Tax (VAT)-registered.
Value-Added Tax in Philippines
is a form of sales tax. It is a tax on consumption levied on the
sale of goods and services and on the imports of goods into the
Philippines. It is an indirect tax, which can be passed on to the buyer.
10. The Philippine Tax System :Roles of Bureau of
Internal Revenue and Bureau of Customs
Bureau of Internal Revenue (BIR)
The powers and duties of the BIR shall comprehend the assessment
and collection of all national internal revenue taxes, fees, and charges, the
enforcement of all forfeitures, penalties, and fines connected therewith, including
the execution of judgments in all cases decided in its favor by the Court of Tax
Appeals and the ordinary courts.
Of the two functions of the BIR, assessment and collection, the
effectiveness of the collection depends on the quality of the assessment done by
the enforcement officers/officials assigned for such duties.
Assessment functions can further be subdivided into two major
activities.
1. Voluntary or Self-Assessment
2. Enforced Assessment
11. The Philippine Tax System :Roles of Bureau of
Internal Revenue and Bureau of Customs
Bureau of Customs (BOC)
1. Responsible for assessment and collection of the lawful revenue from
imported articles and all other duties, fees, charges, fines and
penalties accruing under the tariff and customs law
2. Prevention and suspension of smuggling and other frauds upon
customs
12. Financing Philippine National
Government, Local Government, Public
Corporations
What is National Government?
Under the Constitution, the government is divided into executive,
legislative, and judicial departments. The separation of powers is based
on the theory of checks and balances.
The Executive branch (law-enforcing body) is under the headship of
the president. The president obtains the position through national voting
system; the tenure is a six-year period.
Legislative branch (law-making body) is characterized by a bicameral
Congress comprising the Senate and the House of Representatives.
Occupying the upper house is the Senate whose 24 members are voted
for in a national election with a 6-year term.
13. The Judicial branch (law-interpreting body) demonstrates its authority
to the Supreme Court of the Philippines as the highest judicial body
and presided by a Chief Justice with 14 Associate Justices; all are
appointed by the president under the advice of the Judicial and Bar
Council.
What are the major sources of funds to finance the national
government?
1) revenues from both tax and non-tax sources;
2) borrowings from both domestic and foreign sources; and,
3) withdrawals from available cash balances
14. A Bangko Sentral ng Pilipinas, is a banking institution granted the
exclusive privilege to lend a government its currency. Like a normal
commercial bank, the bank charges interest on the loans made to
borrowers, primarily the government, typically as a 'lender of last resort'.
15. Financing Philippine National Government,
Local Government, Public Corporations
What is Local Government?
-A political subdivision of a nation or state consituted by Law
which has substantial control over local affairs including the
power to impose taxes, governing body of which is elected or
appointed.
-A political subdivision of the National Government excluding the
field offices of line agencies geographically located within the
jurisdiction of LGU’s.
17. Organizational Responsibilities of LGU to Local
Fiscal Administration :
1. The giving of allotments and grants by the national government
(NG) to local government units (LGUs);
2. Sharing of taxing powers between the NG and the LGUs, and
among LGUs units;
3. Solicit on tax rates and structure;
4. Revenue and expenditure planning;
5. Revenue utilization and expenditure allocation;
6. Monitoring and approval of budgets, tax ordinances and other
fiscal measures;
7. Policy on borrowing and borrowing instruments; and
8. Appointment and supervision of local fiscal officers. .
Organizational Responsibilities of LGU to Local Fiscal
Administration
18. Local Governments’ Share of National Revenues
Barangays Provinces
20% 23%
Municipalities Cities
34% 23%
19. Financing Philippine National
Government, Local Government, Public
Corporations
What is Public Corporation?
These are corporations created or established by a special charter or
law in the interest of the common good and subject to the test of Economic
viability.
They are directly under the Government Corporate Monitoring and
Coordinating Committee, which has the primary responsibility to monitor,
coordinate, and conduct performance evaluation of all Government-owned and
Controlled Corporations (GOCCs).
How is the Public Sector funded?
Mostly, but not exclusively from taxation. Taxation itself can
come in many forms. Direct taxation is taxation applied against declared
income.
20. List of government owned and controlled corporations
(GOCC) in the Philippines based on records from the
Commission on Audit (COA). 08/10/2010
Al-Amanah Islamic Investment Bank of the Philippines (ISLAMIC BANK)
Bangko Sentral ng Pilipinas (BSP)
Bases Conversion Development Authority (BCDA)
Cebu Ports Authority (CPA)
Clark Development Corporation (CDC)
Cottage Industry Technology Center (CITC)
Center for International Trade Expositions and Missions (CITEM)
Cultural Center of the Philippines (CCP)
Development Academy of the Philippines (DAP)
21. Development Bank of the Philippines (DBP)
DBP Data Center, Inc. (DCI)
Duty Free Philippines
Employees' Compensation Commission (ECC)
Food Terminal Incorporated (FTI)
Government Service Insurance System (GSIS)
Home Development Mutual Fund (Pag-IBIG)
Home Guaranty Corporation (HGC)
Laguna Lake Development Authority (LLDA)
Land Bank of the Philippines (LBP)
Light Rail Transit Authority (LTRA)
Livelihood Corporation (LIVECOR)
22. Local Water Utilities Administration (LWUA)
Lung Center of the Philippines (LCP)
Mactan-Cebu International Airport Authority (MCIAA)
Manila International Airport Authority (MIAA)
Masaganang Sakahan, Inc.
Metropolitan Waterworks and Sewerage System (MWSS)
National Agribusiness Corporation (NABC)
National Dairy Authority (NDA)
National Development Company (NDC)
NDC Maritime Leasing Corporation (NLMC)
National Electrification Administration (NEA)
National Food Authority (NFA)
National Home Mortgage Finance Corporation (NHMFC)
National Housing Authority (NHA)
National Irrigation Administration (NIA)
National Livelihood Support Fund (NLSF)
23. National Kidney and Transplant Institute (NKTI)
National Power Corporation (NAPOCOR)
National Tobacco Administration (NTA)
National Transmission Corporation (TRANSCO)
North Luzon Railways Corporation (NorthRail)
Northern Foods Corporation (NFC)
Natural Resources Development Corporation (NRDC)
Occupational Safety and Health Center (OSHC)
Overseas Workers Welfare Administration (OWWA)
People's Credit and Finance Corporation (PCFC)
PEA Tollway Corporation (PEATC)
Philippine Aerospace Development Corporation (PADC)
Philippine Amusement and Gaming Corporation (PAGCOR)
Philippine Center for Economic Development (PCED)
Philippine Charity Sweepstakes Office (PCSO)
Philippine Coconut Authority (PCA)
24. Philippine Convention and Visitors Corporation (PCVC)
Philippine Crop Insurance Corporation (PCIC)
Philippine Deposit Insurance Corporation (PDIC)
Philippine Economic Zone Authority (PEZA)
Philippine Export-Import Credit Agency (PHILEXIM)
Philippine Health Insurance Corporation (PHILHEALTH)
Philippine Heart Center (PHC)
Philippine International Convention Center (PICC)
Philippine International Trading Corporation (PITC)
Philippine Institute for Development Studies (PIDS)
Philippine Institute of Traditional and Alternative Health Care (PITAHC)
Philippine National Oil Company (PNOC)
PNOC Alternative Fuels Corporation (PNOC AFC)
PNOC Exploration Corporation (PNOC EC)
PNOC Development and Management Corporation (PDMC)
PNOC PNOC Shipping and Transport Corporation (PNOC ST
25. Philippine National Railways (PNR)
Philippine Ports Authority (PPA)
Philippine Postal Corporation (PHILPOST)
Philippine Postal Savings Bank, Inc. (PPSB)
Philippine Retirement Authority (***)
Philippine Reclamation Authority (formerly Philippine Estates Authority)
Philippine Rice Research Institute (PRRI)
Poro Point Management Corporation (PPMC)
Power Sector Assets and Liabilities Management Corporation (PSALM)
Philippine Tourism Authority (PTrA)
Quedan Rural Credit and Guarantee Corporation (QUEDANCOR)
Radio Philippine Network, Inc. (RPN)
Small Business Guarantee & Finance Corporation (SBGFC)
Social Housing Finance Corporation (SHFC)
Social Security System (SSS)
Subic Bay Metropolitan Authority (SBMA)
Sugar Regulatory Administration (SRA)
Technology & Livelihood Resource Center (TLRC)
Trade and Investment Development Corporation of the Philippines
(TIDCORP)
Zamboanga City Special Economic Zone Authority (Zamboanga Freeport
Authority)
26. Reason of Creation of Public Corporations
Established not for the purpose of competing with private
enterprises but to provide essential public services, to promote
the economic development of the country.
27. Public Expenditures :
Process , Methods and Patterns
What is National Budget?
The national budget is a financial plan of government or the
translation of government’s programs in monetary terms.
Public expenditures are prepared and implemented with due
consideration to the financial resources available to government to fund
its expenditures. Thus, revenue and financing (borrowing) programs are
drawn-up, along with the expenditure program, and form part of the
budget.
29. Budget Preparation
Budget preparation phase involves activities linked to the
formulation and consolidation of the national budget which
will eventually be proposed by the President for approval
by Congress. Preparation of the annual budget for a
particular year is done in the preceding year.
Major activities in this phase are:
Setting of overall budget policy
Agency-level budget formulation
Executive review, deliberation and approval
Preparation of budget documents and submission to
Congress
30. Budget Legislation
Budget legislation starts once the President transmits the
proposed budget to Congress. Congress plays a central role in
this phase. Article VI, Sec. 29 of the Constitution provides that
“No money shall be paid out of the Treasury except in
pursuance of an appropriation made by law.” An appropriation is
essentially an authorization made by law or other legislative
enactment, directing payment out of government funds under
specified conditions for specified purposes. The budget
legislation is thus the process of securing an appropriation for
the budget to be implemented.
Bicameral Conference Committee. The general appropriations bills
approved by the two chambers of Congress are not usually
identical.
31. Budget Execution
The GAA serves as the legal basis which allows for the use of
funds from the national treasury for specified expenditure items
provided therein. However, the existence of a GAA alone does not
imply that agencies can start utilizing and drawing funds to finance
their programs and activities
32. Budget Accountability
Since government officials act as stewards of public resources, it is
essential that mechanisms be put in place to promote accountability on how
they use public resources entrusted to them and how they have exercised
the fiscal powers which were granted to them by the Constitution and
existing laws, rules and guidelines.
Tax of transfer of real property ownership :Tax of transfer of real property ownership tax on the sale, donation, barter, or on any other mode of transferring ownership or title of real property at the rate of not more than fifty percent (50%) of one percent (1%) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial, whichever is higher. Tax on business of printing and publication :Tax on business of printing and publication tax on the business of persons engaged in the printing and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others of similar nature, at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year Franchise Tax :Franchise Tax the province may impose a tax on businesses enjoying a franchise, at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction. In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the capital investment Tax on sand, gravel and other quarry resources :Tax on sand, gravel and other quarry resources The province may levy and collect not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources, as defined under the National Internal Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction Professional Tax :Professional Tax annual professional tax maybe imposed on each person engaged in the exercise or practice of his profession requiring government examination at such amount and reasonable classification as the sangguniangpanlalawigan may determine but shall in no case exceed Three hundred pesos (P=300.00). Amusement Tax :Amusement Tax an amusement tax maybe collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent (30%) of the gross receipts from admission fees.
Relevance of Taxation in the Domestic Economy1. The growth of the domestic economy is dependent upon the productive effort and the spending behavior of both government (public sector) and the private sector. The government and the private sector are interdependent with each other.2. The productive effort and the spending behavior of government (public sector) are dependent upon the revenues/taxes it generates and the quality of its governance. All the goods and services provided by government make up the public sector of the economy. The government pays for most of the services with money it collected from taxes, fees and charges, otherwise funds are obtained through local or foreign borrowings.3. The productive effort and the spending behavior of the private sector are influenced by the availability of the country’s productive resources such as labor, capital, its natural resources, technology and the business environment which includes the quality of leadership both in the public and private sector. It is also influenced by the policies of the State.Business is primarily influenced by economic forces such as the law of supply and demand, profit, markets, prices, competition, distribution of income and not by taxation. Taxation must be neutral in the sense that it must be the least influencing factor in the decision to venture in business, to sustain or to close it. Investment decisions must be based on sound economic grounds and not tax driven.5. Market is primarily influenced by the demand of the product or service due to its quality and price in an environment of fair competition, not by taxes.6. Business entities will be most productive if time is spent in developing or improving the market of its products/services through better quality and price effectiveness. Time must not be spent, more than what is necessary, in dealing with government intervention including the complexities of the tax system and tax administration.7. While taxes are the sources of government funds used in providing basic services to the community, business entities may avail of the effective legitimate tax incentives, tax shelters and tax shields to help propel the economy. Tax avoidance is the legal means of lessening or altogether avoiding taxes by means which the law permits. It is not punishable by law. In contrast, tax evasion is a term that connotes fraud through the use of pretenses and forbidden devices to lessen or defeat taxes. It is punishable by law.8. Nevertheless, a business entity must be able to identify the right tax person (within or outside of the taxpayer’s organization) who is competent and trustworthy in dealing with tax matters. Surely, taxes are inevitable.
Department of Finance (DOF) (Filipino: KagawaranngPananalapi) is the executive department of the Philippine Government responsible for the formulation, institutionalization and administration of fiscal policies, management of the financial resources of government, supervision of the revenue operations of all local government units. the review, approval and management of all public sector debt, and the rationalization, privatization and public accountability of corporations and assets owned, controlled or acquired by the government.Overseas the administration of taxes in the Phils.Both the BOC and the BIR (Agencies authorized to collect tax)are under the supervision and control of the Department of Finance (DOF). The Bureau of Internal Revenue under the Department of Finance administers taxation. Its main functions consist of assessment, collection, processing and tax payer assistance. It is headed by a Commissioner who has the exclusive and original jurisdiction to interpret the provisions of the code and other tax law.
Bureaus,other Agencies and corporations under DOFSome people have previously argued that the BIR and the BOC should be united into a single government department. There are good arguments both for and against this. Either way, the more effective and transparent these are, the greater the level of public funding available. It is no secret that there are serious problems with corruption in both departments.
Corporate Tax in Philippines-. In Philippines, taxation system is governed by the Tax Reform Act 1997, passed into law on December 11, 1997 and became effective on 01 January 1998. The law was aimed at the expanding the country's tax base and maintaining the healthy fiscal standing of the government.Customs Duty in PhilippinesAlso called tariff, duty is based generally on the value of goods (called ad valorem duty) or upon the weight, dimensions or some other criteria of the item.The Philippines has witnessed two major episodes of tax policy reforms, first in 1986 and another in 1997. The 1986 Tax Reform Package (TxRP) was designed to promote a fair, efficient, and simple tax system.Prior to 1986, the income tax system had two tax schedules for: Compensation and income (salaries and wages) category under a gross income scheme of nine steps from one percent to 35 %; and Business and professional income on a net basis of five steps from five percent to 60%. A complicated sales tax structure existed consisting of sales/turnover tax along with a host of other indirect taxes such as compensating tax, miller’s tax, contractor’s tax, broker’s tax, and distributor’s tax. Excise taxes were imposed on petroleum products, alcoholic beverages, cigars and cigarettes, fireworks, cinematographic films, automobiles, and other products classified as non-essential goods.
BIR collects more than one-half of the total revenues of the government.FunctionsThe powers and duties of the Bureau of Internal Revenue are:Assessment and collection of all internal revenue taxes, fees and charges; andenforcement of all forfeitures, penalties, and fines connected therewith, including the execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts;It shall also give effect to and administer supervisory and police powers conferred to it by the National Internal Revenue Code and special laws.
Tariff and customs duties are used interchangeably in the. It may be used in one of these three (3) senses:a. A book of rates drawn usually in alphabetical order containing the names of several kinds of merchandise with the corresponding duties to be paid for the same; orb. The duties payable on goods imported or exported; orc. The system or principle of imposing duties on the importation or exportation of goods.
Domestic borrowings- Public corporations
Barangay -Smallest political unit into which cities and municipalities in the Philippine Political system.Municipality -Political corporate body endowed with facilities of municipal corporation, Execised by and through the municipal gov’t in con Formity with law subsidiary province consist of Barangays within its territoral boundariesCity -is a tier of local government in the Philippines. Cities are in the same heirarchical level as municipalities, but under the Local Government Code of 1991, cities are given special treatment in terms of bigger share from the internal revenue allotment (IRA) which forms part of the city's budget.Province - Largest unit in the political Structure of the Philippines In varying numbers of Municipalities and in some Cases, of component cities -Its functions and duties in Relation to its component Cities and municipalities are generally coordinative And sepervisoryRegion -Sub national administrative unit comprising of several provinces
Local Budget Process Local budgeting also undergoes the four phases of the budget process discussed above but the fiscal decisions and authorities are performed primarily by local government bodies and officials. Budget preparation is done by estimating the expected revenues and expenditures by the local treasurer and submitted to the local chief executive (e.g. provincial governor, city/municipal mayor). Heads of local offices do the statements of proposed expenditures while the chief executive consolidates and submits the proposed revenues and expenditures to the local legislative body for approval. Budget authorization is conducted to secure an appropriation which forms as the basis for spending of local funds. The local legislative bodies, i.e., local sanggunianor councils, deliberate and approve the proposed local budget with the end in view of adopting an appropriations ordinance. Budget execution and accountability are done with the technical assistance of local financial officers (ex. local treasurer, budget officer, accounting officer). The local chief executive releases the allotments to departments/offices of the LGUs. COA has promulgated accounting rules and guidelines for LGUs and barangays under the New Government Accounting System. COA also conducts audit of LGUs.
Under the Local Government Code of 1991 (Republic Act 7160), local government units are allotted shares from the national internal revenue taxes in the form of Internal Revenue Allotment (IRA). The Code prescribes that the IRA shall be forty (40) percent of the national internal revenue collections for the third fiscal year preceding the current fiscal year. The total IRA is further subdivided among the different levels of LGUs: Provinces – 23 percentCities – 23 percentMunicipalities – 34 percentBarangays – 20 percent The Code further prescribes that the share of each province, city and municipality shall be determined on the basis of the following formula: Population – 50 percentLand Area – 25 percentEqual sharing – 25 percent
The public sector is also funded by profits made by public sector companies, like the Philippine Amusement and Gaming Corporation and like any individual, or family, the government can make money from investments it makes. Of course, it can also lose money from bad investments.How is public sector fundedTaxation may also be indirect – that is taxation put on goods and services. This includes sales tax and taxation put on things like fuel such as gasoline or liquid petroleum gas. Indirect taxation is often called a ‘regressive tax’ given that it hurts poor consumers more – proportionality – than richer consumers. Direct/income tax is said meanwhile to be ‘progressive’ in that it is said to be fairer given it is based on a percentage of income.
4 ways to classify GOCCaccdg. To the degree of which the govt owns and controls the – wholly owned by govt2. Accdg to service or function-mixed enterprise3. Accdg to executive supervision and coordination-only subject to some degree of supervision but no element of govt investment4.Accdg to functions pursuant to supreme court decisions-incorporated by financial institutions of govt/financed by shares of stocks
The annual budget contains the expenditures program which enumerates the different expenditure items and the respective amounts intended to be spent for each. These expenditures are supposed to achieve public purposes and be consistent with development objectives. The expenditure program, however, is just one dimension of the budget.
Budget Preparation phase covers the stages from determination of budgetary priorities to submission by the President of the Budget of the Expenditures and Sources of Funds (BESF) to Congress.Budget Authorization or legislation pertains to the legislative consideration and approval of the Appropriations Bill.Budget Execution comprises the operational aspects of budgeting.Budget Accountability and Review involves submission of accountability reports to fiscal agencies and to Congress.
Setting of overall budget policy. The overall budget policy for a given year is set by the Development Budget Coordination Committee or DBCC, an inter-agency body responsible for setting the fiscal policies of government. The DBCC is chaired by the DBM secretary and the members include the Department of Finance (DoF) secretary, director general of the National Economic Development Authority (NEDA), head of the Monetary Board of the BangkoSentralngPilipinas (BSP) and a representative from the Office of the President.Agency-level budget formulation. After the DBCC deliberates and decides on the overall budget policy, DBM issues the Budget Call to guide agencies in the preparation of their respective proposed budget. It defines the budget framework/priorities, the macroeconomic assumptions and fiscal targets. The Budget Call also prescribes the priority thrusts and spells out the detailed policies on agency-level budget preparation such as budget ceilings, resource allocation, required budget preparation documents and formats, and timeline of the budget preparation phase.Executive review, deliberation and approval. The budgets formulated by agencies are submitted to the DBM and undergo a series of review and deliberation at the DBM, DBCC and Cabinet levels. The DBM reviews the submitted budgets for consistency with existing policies and guidelines. Technical budget hearings are conducted to discuss with agencies the justifications for their budget and appropriate adjustments to be made when warranted. The budget of the agencies are then reviewed and deliberated at the DBCC level and finally presented at the Cabinet level. Once the budget is cleared with the President, the DBM finalizes the budget documents which the President will submit to Congress for approval.reparation of budget documents and submission to Congress. The budget documents prepared by the DBM consist of at least the following: The President's Budget MessageBudget of Expenditures and Sources of FinancingNational Expenditures ProgramDetails of Selected Programs/ProjectsStaffing Summary The set of budget documents consolidates the budgets from different agencies of government. The President’s Budget Message provides information on the overall thrust of the budget being proposed and an explanation of the sectoral spending priorities and how it supports development goals.
Bicameral Conference Committee. The general appropriations bills approved by the two chambers of Congress are not usually identical. Thus, the two chambers form a bicameral conference committee (or bicam committee) to iron out the differences in their respective budget bills. The bicam committee is tasked to come up with a consolidated version of the general appropriations bill which is contained in a bicam report. The bicam report is brought back to both houses for approval of their members.
. Agencies need to secure an allotment to be able to obligate amounts specified in their budgets; cash allocation should also be secured before disbursements can be made to settle these obligations. The budget execution phase is concerned with these operational aspects of budgeting which facilitates the translation of appropriations to disbursements, or more specifically the release of funds through allotments and Notice of Cash Allocation (NCA).
There is a body of laws, rules and regulations instituting a government accounting and state audit system in the Philippines. The Commission on Audit and the DBM ensures that these systems are in place and that agencies comply with these accounting rules and are subjected to audit. The New Government Accounting System or NGAS was put in place which sets the comprehensive guidelines for agencies in accounting for budgetary accounts, accounting for all its receipts and incomes, accounting for its disbursements, and the financial reporting systemThe COA conducts annual external audit of government agencies. The audit scope includes financial, compliance and performance audit. Financial audit are conducted to ensure that financial reports of agencies reflect a more-or-less realistic picture of the financial conditions of the agency. Compliance audit looks at the consistency of the agency’s financial management practices with those prescribes by pertinent laws, rules and regulations. Performance audit evaluates the operations of the agency in terms of economy, efficiency and effectiveness. Audit reports are a rich source of information on of the extent to which agencies are able to achieve the greatest value for money that has been entrusted to them.
