What is state accounting in the Philippines? Is it similar to state auditing? 

Under Section 109, of the Presidential Decree (PD) no. 1445, defines Government Accounting as one that encompasses the process of analyzing, classifying, summarizing and communicating all transactions that are involved in the receipt and disbursement of all government funds and properties, and interpreting the results thereof. In pursuant to this definition, objectives were set to cover several areas in government operations.

State/Government Accounting produce relevant financial information about past and present transactions of government. It also serves as basis for decision making for future operations might as well act as the control mechanism for the receipt, disposition and utilization of government funds and properties.

In addition, it also come up with financial reports pertaining to the results of operations of various government agencies that are for dissemination to the public.

The need for timely preparation of financial reports in government is necessary to evaluate the performance of the different agencies of government. The result of the reports would indicate the areas that may still need improvement, as well as come up with the budgetary requirements for these agencies if deemed necessary.

Public officers are managers of funds that are entrusted to them by the national government. The financial reports would clearly show if the agencies are achieving what is mandated of them. These reports would also show the extent in the use of agency assets and resources, as well as the need for additional infusion of funds if required

The accounting data would show how the funds of government were used. This would also reveal the inflow and outflow of funds and the need for stiffer fund management and control, if necessary.

A state audit and a state accounting process share differences and similarities, although many use the two interchangeably. The two words involve separate processes that a country could use to prepare and monitor its financial data. Relying on both processes to search out questionable procedures builds public trust in a country’s financial statements.

State accounting on the other hand involves handling of daily financial transactions of the government. This includes very diverse functions ranging from the incoming/revenue earnings to the outgoing procurement. Some accounting functions include the expenditures or payments sent to stakeholders. It also includes the cash, commodities, services and electronic payments received from stakeholders by means of foreign exchange; and monetary values written and received by the government. Payroll and tax deductions, along with the reconciling of the government’s books for the year, are all accounting processes.

On the other hand, state auditing as we mentioned in the previous question we answered involves the review of the accounting statements of the government. An audit may be done through forensic accounting, or conducted by the government itself. The audit process is an in-depth examination of each financial transaction made by a government and encompasses the total year-end accounts. Upon the completion of the independent audit, all accounting procedures are verified as accurate.

Several differences exist between a government accounting and government auditing. One important difference is that the audit checks the accounting process to determine its validity. Another difference: accounting is a daily process, whereas an audit is usually conducted annually or quarterly. Another difference is that the accounting is compiled by the agency assigned by the government which in our own situation the COA [Commission on Audit].

The similarities between both government accounting and government audit require a thorough knowledge of accounting procedures, both processes aim to ensure the government’s records accurately reflect its financial position.

It is important to note that government accounting is necessary for many reasons:

First, to keep systematic, easily accessible accounting and documentary records as evidence of past transactions and current financial status, so that detailed transactions can be identified and traced and all aggregates can be conveniently broken down into their constituent parts.

An example of this is the monitoring and evaluation of the government on whether they will increase the proposed budget for the next fiscal year in accordance with the requirements of the new financial status of the government, likewise it will also help them evaluate whether they shall pursue the project that is not cost-efficient so that they could redirect their goals and priorities to other projects of the government in line with the mandated tasks laid down by the President.

Second is the budgetary control, government accounting facilitates budgetary control. No government institution can make expenditure more than the allocated budget amount. In the Philippine Navy, the Office of the Financial Management is the one who controls the budget of the Philippine Navy and through this office all transactions regardless it is included in the APB or not should pass through the scrutiny of the office. Therefore, if BNS [Bonifacio Naval Station] will have an emergency repair of its facilities, the latter office shall see to it that the BNS is within its budget limit and recommends any financial advice if deemed necessary.

Finally, government accounting helps with the profit and loss. The main objective of the government is to maintain law and order in the country. So, it does not reveal profit and loss but it reveals how public funds have been used.

In my own observation, there are several government officials who post or disseminate the expenditures on walls and tarpaulins attached to an ongoing site or project of the government, It is a way to let the public know where their taxes are going and how the government spent it. It also helps the public to understand the efforts of the government in providing transparency.


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