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NGAs: The New Barangay Accounting System of the Philippines
Overview of the NGAs New Barangay Accounting System
The Commission on Audit (COA) under the 1987 Constitution of the Philippines, prescribed the adoption of the New Government Accounting System (NGAs) for the Barangay level that was implemented beginning the fiscal period, 1987.
The Philippine local government has four tiers: autonomous regions, provinces, cities and municipalities, and the Barangay. All tiers below the regional level are called Local Government Units or LGU’s. The local government code was enacted in 1991. It provides for the mechanism with which the LGU’s organize and operate within the context of an accountable local government.
Basic Features of the NGAs New Barangay Accounting System
- Accounting Method – shall be on accrual basis where revenues are recognized when earned and expenses recorded when incurred. Income and expenses shall be kept on the books of account on the specific period that they relate to.
- Recognition of Liability – liabilities shall be taken up on the books --- when goods are accepted and delivered, when services are rendered, and; upon receipt of supplier’s invoices. Cash received in advance for the fulfillment of a job, shall be recorded as a liability, not as an asset. All loans shall be recorded in their appropriate liability account.
System of Government in the Barangay Level
The books of account are maintained by the City or Municipal accountant. Financial reports from the barangay are submitted on the 5th day of the following month, to the city or Municipal accountant. The books of the original and final entry include: receipts and bank deposit slips, disbursements either in check or in cash, and the accounting registries of Public Infrastructures and Reforestation projects which are updated and prepared for the proper accounting of funds.
An accounting system should be implemented as there are myriad of problems in the barangay. Among them are: population control and poverty alleviation, cleanliness and waste management, drug problems and criminality, corruption, and mismanagement of funds.
Accounting System at the Barangay
The News Government Accounting System (NGAS) was implemented on January 1, 2002 for all LGUs, except the barangays. In other words, the modified accrual system under NGAS will not be applicable, and the usual practice of recording cash upon receipt and expenditures will be observed. (COA Circular No. 2002-003 dated June 20, 2002)
A Quick Test
The Accounting Method adopted for the new barangay accounting system is:
- Purchases of Supplies – purchases of small items with an expected life of one year, shall be recorded initially in the books as Inventory, and as an Expense upon its issuance to officers and employees.
- Other items for Purchases that do not fall under this description, shall be recorded under Plant, Property, and Equipment with depreciation applied accordingly.
- Cash Advances – cash advances for personal purposes shall be accounted for in the Payroll Fund; advances in travel and other agency related functions, shall be recorded as Advances to Officers and Employees.
- Disallowances – shall only be taken up in the books when it becomes final and executory as may be decided upon during the audit of expenses.
- Barangay accounts – these accounts shall be kept within the guidelines of the New Government Accounting System (NGAS) chart of accounts.
- Processing of Transactions and Recording in the Books of Account- processing of accounts are done in the barangay; while recording in the books are done at the municipal and city level. The financial books of the barangay are kept in the city or municipal offices.
- Recording in the books shall be made through reports submitted by the Barangay Treasurer or Record Keeper. Supporting documents are kept in the barangay and made available to COA when needed.
- Supporting Schedules – the barangay shall prepare the following supporting schedules relating to: Public Infrastructures and Reforestation Projects; Accounts Payable, and Accounts Receivable.
- E-NGAS – the new electronic system shall be used to speed up the recording of transactions at the barangay and to hasten the process of consolidation of financial statements at all levels.
- Certified Registers – shall include certified registers for: cash receipts, cash on hand and in the bank, cash disbursement, check disbursement, and the petty cash fund;
- Appropriations, Commitment, and Balances – shall be consolidated by the municipal/city level’s budget officer;
- Trial Balance – shall be presented in two money column format;
- Financial Statements – the city/municipal level accountant shall prepare the financial statements (FS) within thirty days after the close of each month. Copies are furnished to the Sangguniang Barangay and the audit team leader;
The FS shall include detailed and condensed copies of the Balance Sheet and the Income and Expense Summary. Other FS includes Cash Flows prepared under the direct method and Statement of Changes in Government Equity.
Financial Transactions of the Barangay
- Appropriations - Appropriations are funds that are authorized by the Sanguaniang Bayan or the local legislative body to spend funds for a project or undertaking where services or goods have already been received. Appropriations are charged against several sources: General, Development, Calamity, Sangguniang and Kabataan, and Gender and Development Fund.
- Commitments - are specific funds that are earmarked by an authorized barangay official that commits the barangay to pay a specific sum of money. Charges for the specific fund shall be based upon the commitment of funds by the barangay as evidenced by Contracts and Purchase orders, Disbursement vouchers, and Payroll for specific services.
- Receipts of Cash and Bank Deposits – collections made for local licenses and fees shall be deposited intact in the next banking day
- Disbursements – payments of local government expenses used for day to day operations.
- Supplies and Materials; Plant, Property and Equipment, Public Infrastructure and Reforestation- are charged against their respective appropriations and capital outlay
Duties of the Barangay Record Keeper
The Barangay Record Keeper is tasked to prepare several financial reports based on standard format that pertains to Status of Appropriations and Registries of Appropriation and Commitments of government funds for submission to the Municipal Budget Officer on or before the 5thof January of the ensuing year. He sees to it that proper recording of entries are done, taking into account the new barangay accounting system under NGAS, for proper monitoring of accounts.
Other Related Articles from Author:
- Manuals on NGAS, LGU's, Baranggay issued by COA
- Circulars issued by COA and the IAS
- Procedural and Comprehensive Approach in Government Accounting by Punzalan and Cardona