FINAL EXAM Flashcards
An estimation of the revenue and expenses over a specified future period of time and is compiled and re-evaluated on a periodic basis.
Budget
A series of actions or steps taken in order to achieve a particular end.
Process
It is the critical exercise of allocating revenues and borrowed funds, and management of government expenditures.
Government Budgeting
It is important because it enables the government to plan and manage its financial resources to support the implementation of various programs and projects that best promote the development of the country.
Government Budgeting
What are the major processes involved in national government budgeting?
Budget preparation
Budget Legislation
Budget Execution
Budget Accountability
This starts with Budget Call and ends with the President’s submission of the proposed budget to Congress.
Budget Preparation
DBCC stands for
Development Budget Coordination Committee
Development Budget Coordination Committee (DBCC)
• Headed by DBM Secretary
• Members: Secretary of Finance, NEDA
Director-General, and the Bangko Sentral Governor with the Office of the President for general oversight.
Membership of the DBCC
DBCC -head
DBM
DOF
NEDA
OP
BSP
Functions of the DBCC
• Recommend for Presidential approval the level of the annual government expenditure program and the ceiling of government spending for economic and social development, national defense, general government and debt service;
• Recommend to the President the proper allocation of expenditures for each development activity between current operating expenditures and capital outlay; and
• Recommend to the President the amount set to be allocated for capital outlay under each development activity for various capital or infrastructure projects.
• The assessment of the reliability of revenue estimates;
• The recommendations of appropriate tax or other revenue measures and the extent and type of the borrowings; and
• The conduct of periodic review and general examination of costs, accomplishments and performance standards applied in undertaking development projects
Functions of the DBCC
• Recommend for Presidential approval the level of the annual government expenditure program and the ceiling of government spending for economic and social development, national defense, general government and debt service;
• Recommend to the President the proper allocation of expenditures for each development activity between current operating expenditures and capital outlay; and
• Recommend to the President the amount set to be allocated for capital outlay under each development activity for various capital or infrastructure projects.
• The assessment of the reliability of revenue estimates;
• The recommendations of appropriate tax or other revenue measures and the extent and type of the borrowings; and
• The conduct of periodic review and general examination of costs, accomplishments and performance standards applied in undertaking development projects
provides the over-all macro- economic assumptions with which budgetary levels are to be determined.
National Economic and Development Authority
It help the DBCC in determining the sources of financing.
The Department of Finance (DOF), the Bureau of the Treasury, the Bureau of Internal Revenue and the Bureau of Customs
they determines the overall economic targets, expenditure levels, the revenue projection, deficit levels and the financing plan. It submits them to the President and the Cabinet for approval.
DBCC
Once these are approved, the DBM issues the ————. This requires agencies to prepare their budgets in accordance with the said guidelines, macro-economic assumptions, and ceilings. The DBM spells out guidelines, procedures, and timetables.
Budget Call
At the beginning of the Budget Preparation year, the Department of Budget and Management (DBM) issues the ______________________ (including State Universities and Colleges) and a separate Corporate Budget Call to all GOCCs and GFIs.
National Budget Call to all agencies
The Budget Call contains __________as set beforehand by the Development Budget Coordination Committee and ___________
budget parameters
policy guidelines and procedures in the preparation and submission of agency budget proposals.
see the picture
NATIONAL BUDGET MEMORANDUM NO. 142
• A new feature in budget preparations which seeks to increase citizen participation in the budget process, departments and agencies are tasked to partner with civil society organizations (CSOs) and other citizen-stakeholders as they prepare their agency budget proposals.
• This new process, which was piloted in the preparation of the 2012 National Budget, is now being expanded towards institutionalization.
STAKEHOLDER ENGAGEMENT
The Aquino government, through the Cabinet Cluster of Human Development and Poverty Reduction, has identified 300 to 400 of the poorest municipalities and engaged these in crafting community-level poverty reduction and empowerment plans. This initial salvo of “bottom- up” budgeting focused on rural development programs and the conditional cash transfer program, and thus involve DA, DAR, DENR, DSWD, DepEd and DOH. These agencies then include the community plans in their proposed budgets.
BOTTOM-UP BUDGETING
These are conducted after departments and agencies submit their Agency Budget Proposals to the DBM. Here agencies defend their proposed budgets before a technical panel of DBM, based on performance indicators on output targets and absorptive capacity. DBM Bureaus then review the agency proposals and prepare recommendation.
TECHNICAL BUDGET HEARINGS
These are conducted after departments and agencies submit their Agency Budget Proposals to the DBM. Here agencies defend their proposed budgets before a technical panel of DBM, based on performance indicators on output targets and absorptive capacity. DBM Bureaus then review the agency proposals and prepare recommendation.
TECHNICAL BUDGET HEARINGS
• The recommendations are presented before an Executive Review Board which is composed of the DBM Secretary and senior officials.
• Deliberations here entail a careful prioritization of programs and corresponding support, vis-à-vis the priority agenda of the National Government
• Implementation issues are also discussed and resolve.
Executive Review
• DBM then consolidates the recommended agency budgets and recommendations into a National Expenditure Program and a Budget of Expenditures and Sources of Financing (BESF).
• As part of the consolidating process, the deliberations by the DBCC will determine the agency and sectoral allocation of the approved total expenditure ceiling, in line with the macroeconomic and fiscal program. Heads of major departments are invited to this meeting.
CONSOLIDATION, VALIDATION AND CONFIRMATION
• The proposed budget is presented by the DBM, together with the DBCC, to the President and Cabinet for further refinements or reprioritization.
• After the President and Cabinet approved the proposed National Expenditure Plan, the DBM prepares and finalizes the budget documentations to be submitted to Congress.
PRESENTATION TO PRESIDENT AND CABINET
The Budget preparation phase ends with the submission of the proposed National Budget – the “President’s Budget” - to Congress.
the president’s budget
It consists of the following documents, which helps legislators analyze the contents of the proposed budget
President Budget
This is where the President explains the policy framework and priorities in the budget
President’s Budget Message (PBM)
Mandated by the Constitution, this contains the macroeconomic assumptions, public sector context (including overviews of LGU and GOCC financial positions), breakdown of the expenditures and funding sources for the fiscal year and the two previous years.
Budget of Expenditures and Sources of Financing (BESF)
This contains the details of spending for each department and agency by program, activity or project, and is submitted in the form of a proposed General Appropriations Act
National Expenditure Program (NEP)
This contains a more detailed disaggregation of key programs, projects and activities in the NEP, especially those in line with the national government’s development plan.
Details of Selected Programs and Projects
This contains a summary of the staffing complement of each department and agency, including number of positions and amounts allocated lor the same.
Staffing Summary
In crafting the proposed 2022 national budget, ________________takes into account a set of macroeconomic assumptions which determines the plausibleness of the budget’s execution.
the Development and Budget Coordination Committee (DBCC)
Based on the 2022 BESF1, these major ___________ are as follows: (i) real GDP growth rate, (ii) inflation rate, (iii) interest rate (364-day Treasury bill rate), (iv) foreign exchange rate, (v) Dubai oil price, and (vi) unemployment rate. Other parameters include the exports and imports of goods, current account balance, and gross international reserves. Managing the revenue and expenditure program of the government, therefore, may be affected by any deviations from the expected values of these macroeconomic variables.
macroeconomic parameters
Although the overall impact of an increase in inflation rate, exchange rate and prices/volume of imports would be favorable in reducing the budget deficit based on the DOF’s sensitivity analysis, manageable levels should be maintained so as not to stifle consumption and investments aiding economic recovery. And as the decrease in interest rates fails to reduce government disbursements, the efficient and effective delivery of government services to stimulate and support economic growth would ensure that government spending financed by borrowings would in the long run contribute to a budget balance.
This section will discuss the latest performance and evolving prospects of these variables to determine their possible impact on the viability of the proposed 2022 budget.
See the pictures for budget process
See the picture for budget process
• The President submits to Congress the National Expenditure Program (NEP), the Budget of Expenditures and Sources of Financing (BESF), and the President’s Budget Message.
• The BESF is the document which reflects the annual budget and the estimates and sources of financing. The document is presented by the Executive branch to the Legislative branch.
Budget Legislation
• Pertains to the whole range of legislative action on the budget, leading to enactment of a General Appropriations Law of the year.
BUDGET AUTHORIZED PHASE”
The House of Representatives, in plenary, assigns the President’s Budget to the House Appropriations Committee.
• The Committee and its Sub-Committees then schedule and conduct hearings on the budgets of the departments and agencies and scrutinize their respective programs and projects. It then crafts the General Appropriations Bill (GAB).
HOUSE DELIBERATIONS
• As in the House Process, the Senate
conducts its own committee hearings and plenary deliberations on the GAB. Budget deliberations in the Senate formally start after the House of Representatives transmits the GAB.
SENATE DELIBERATIONS
Once both Houses of Congress have finished their deliberations, they will each constitute a panel to the Bicameral Conference Committee. This committee will then discuss and harmonize the conflicting provisions of the House and Senate Versions of the GAB.
BICAMERAL DELIBERATIONS
• The Harmonized or “Bicam” Version is then submitted to both Houses, which will then vote to ratify the final GAB for submission to the President. Once submitted to the President for his approval, the GAB is considered enrolled.
RATIFICATION AND ENROLLMENT
The President and DBM then review the GAB and prepare a Veto Message, where budget items subjected to direct veto or conditional implementation are identified, and where general observations are made. Under the Constitution, the GAB is the only legislative measure where the President can impose a line-veto
VETO MESSAGE
• When the GAA is not enacted before the fiscal year starts, the previous year’s GAA is automatically reenacted. Funding for programs or projects that have already been terminated is realigned for other expenditures
ENACTMENT
The Committee Affairs Department’s activities during budget legislation are:
- Committee Budget Hearings
- Printing of General Appropriations Bill (GAB) on 1st reading
- Executive Meeting of the Committee
- Sponsorship and Plenary Deliberations
- Approval on 2nd Reading of the GAB –
- Amendments, Finalization & Printing of the GAB for 3rd Reading
- Approval of the GAB on 3rd Reading
- Transmittal on the 3rd Reading Copy of the GAB to the Philippine Senate
- Bicameral Conference Committee
- Approval of the Bicam Report
- Finalization and Printing of the Enrolled Copy of the GAB
- Signing of the Enrolled Copy of the GAB –
The Committee Affairs Department’s activities during budget legislation are:
- Committee Budget Hearings
- Printing of General Appropriations Bill (GAB) on 1st reading
- Executive Meeting of the Committee
- Sponsorship and Plenary Deliberations
- Approval on 2nd Reading of the GAB –
- Amendments, Finalization & Printing of the GAB for 3rd Reading
- Approval of the GAB on 3rd Reading
- Transmittal on the 3rd Reading Copy of the GAB to the Philippine Senate
- Bicameral Conference Committee
- Approval of the Bicam Report
- Finalization and Printing of the Enrolled Copy of the GAB
- Signing of the Enrolled Copy of the GAB –
Standing Committee are responsible for conducting budget hearings. During these hearings, macroeconomic assumptions/ plans are presented during the Committee budget hearings on a department wide level. Sub- Committees are also responsible for conducting these budget hearings.
Committee Budget Hearings
a National Expenditure Program is formulated, and a copy of the GAB on 1st reading is printed by the Committee Technical Staff, based on the National Expenditure Program. The GAB is filed in the plenary session for the 1st reading.
Printing of General Appropriations Bill (GAB) on 1st reading –
a National Expenditure Program is formulated, and a copy of the GAB on 1st reading is printed by the Committee Technical Staff, based on the National Expenditure Program. The GAB is filed in the plenary session for the 1st reading.
Printing of General Appropriations Bill (GAB) on 1st reading –
The Committee meets in executive session to discuss and approve proposed committee amendments to the GAB. Committee Reports are prepared and filed to the Bills and Index Division.
Executive Meeting of the Committee –
General principles and macroeconomic assumptions are sponsored and debated in the plenary session. Deliberations on the budgets of each department, agency, office, including Government Owned and Controlled Corporations.
Sponsorship and Plenary Deliberations –
– Turno en contra speeches are delivered on the floor. The turno en contra is a legislative tradition allowing opponents of the bill an opportunity to explain at length their position, in the same manner that a bill’s sponsor delivers a sponsorship speech. After the Turno en Contra, the Philippine House Members vote on the approval of the GAB on the 2nd Reading
Approval on 2nd Reading of the GAB
– Turno en contra speeches are delivered on the floor. The turno en contra is a legislative tradition allowing opponents of the bill an opportunity to explain at length their position, in the same manner that a bill’s sponsor delivers a sponsorship speech. After the Turno en Contra, the Philippine House Members vote on the approval of the GAB on the 2nd Reading
Approval on 2nd Reading of the GAB
inclusion of possible amendments to the GAB for the 3rd Reading are submitted to the floor. Amendments are approved for the inclusion in the proposed copy of the GAB on the 3rd Reading, which is subsequently printed for deliberation.
Amendments, Finalization & Printing of the GAB for 3rd Reading –
The GAB is distributed to the Philippine House Members who votes on the approval of the bill on the 3rd Reading. The GAB is then approved on 3rd Reading.
Approval of the GAB on 3rd Reading –
the GAB, as approved on 3rd Reading, is transmitted to the Senate for consideration in a similar manner as deliberated upon by the House.
Transmittal on the 3rd Reading Copy of the GAB to the Philippine Senate –
– the conferees or representatives from both the Philippine House and Senate convene as a Conference Committee in order to settle and reconcile differing provisions of each Chamber’s version of the bill.
Bicameral Conference Committee
– the conferees or representatives from both the Philippine House and Senate convene as a Conference Committee in order to settle and reconcile differing provisions of each Chamber’s version of the bill.
Bicameral Conference Committee
the Conference Committee Report is ratified by each chamber
Approval of the Bicam Report –
the Conference Committee Report is ratified by each chamber
Approval of the Bicam Report –
- all amendments as approved in the Committee Report is incorporated into the enrolled copy of the GAB. The enrolled copy is finally printed.
Finalization and Printing of the Enrolled Copy of the GAB
- all amendments as approved in the Committee Report is incorporated into the enrolled copy of the GAB. The enrolled copy is finally printed.
Finalization and Printing of the Enrolled Copy of the GAB
– the enrolled copy of the GAB is forwarded to the President for signing. Veto powers of the President are exercised in the enactment of the GAB. The sign appropriations bill is finally enacted into a law which is termed as the General Appropriations Act.
Signing of the Enrolled Copy of the GAB
• It is the process by which
the financial resources made available to an agency are directed and controlled toward achieving the purposes and objectives for which budgets were approved. The process involves compliance with both legal and administrative requirements.
• After the government enacts the budget, there is an ongoing role for civil society organizations (CSOs) in analyzing and assessing how funds are actually spent to implement the policies, programs, and projects outlined in the budget.
BUDGET EXECUTION
• Bidding Process
Issuance of Guidelines by DBM
• Bidding Process
Issuance of Guidelines by DBM
• Agencies are required to submit their BEDs at the start of the budget execution.
Budget Execution Document (BED)
- Overall
physical (targeted outputs) and financial (estimated obligations/expenditures) plan of the agency consistent with their approved budget level for the year, broken
down by quarters.
Physical and Financial Plan (PFP)
Monthly
disbursement requirements of the agency which is the basis for issuance of Notice of Cash Allocation (NCA), Cash Disbursement Ceiling and other disbursement authorities.
Monthly Cash Program -
- Reflects the estimated income for the year by source, as contained under the Budget of Expenditures and Sources of Financing of the given year.
Estimate of Monthly Income
Reflects the level of obligations/ expenditures charged against prior years’ budget, for which goods/ services/ projects are not yet delivered/ rendered/ completed and accepted as of end of the preceding year.
List of Not Yet Due and Demandable Obligations -
Allotments, which an agency is authorized to enter into an obligation, are released by DBM or individually.
Allotment Release -
It is an authorization issued by the Department of Budget and Management (DBM) to an IU (Implement Unit) – through the ABM or SARO which allows the latter to incur obligation for specified amounts contained in a legislative appropriation.
Allotment
is a disaggregation of the agency budget showing the items to be issued SARO for those under needing clearance as well as the amount to be release comprehensively for those under not needing clearances.
ABM – Agency Budget Matrix
it is a specific authority issued to identified IU to incur obligations not exceeding a given amount during a specified period for the purpose indicated. It shall cover expenditures, the release of which is subject to compliance with specific laws or regulations or by competent authority.
SARO – Special Allotment Release Order (SARO)
- In implementing programs, activities and projects, agencies incur liabilities on behalf of the government
Incurring Obligations
- Disbursement Scheme is mostly used, where disbursement agencies chargeable against the treasury are made through Land Bank of the Philippines
Disbursement Modified
• Total disbursement shall not exceed 50% of the unallocated estimated revenue accruing to such fund in additional to actual collections
• No advance payments shall be made unless goods have been delivered or services rendered
• No cash advances shall be made to any local official or employee unless made in accordance with Commission on Audit and regulations • No appropriations shall be transferred from one item to another
• Use of savings is allowed from other items to augment any items in the budget provided that it is within the same expense class
Local Government Units
Limitations on Disbursement
• final phase of the budget process
• this is when the agencies report their actual
physical and financial performance.
• assessment of the physical achievements of
an agency is aided by performance
indicators
BUDGET ACCOUNTABILITY
Budget
• Sets target that agencies should do
Performance Informed Budget
• New approach for a more responsive, transparent, and accountable public expenditure system.
• GAA: Targeted Outcome, Output and Performance Indicator
- PERFORMANCE TARGETS
Budget
• Sets target that agencies should do
Performance Informed Budget
• New approach for a more responsive, transparent, and accountable public expenditure system.
• GAA: Targeted Outcome, Output and Performance Indicator
- PERFORMANCE TARGETS
- BUDGET ACCOUNTABILITY REPORTS (BARs)
see the picture
- BUDGET ACCOUNTABILITY REPORTS (BARs)
see the picture
- BUDGET ACCOUNTABILITY REPORTS (BARs)
see the picture
PUBLIC DISCLOSURE
see the picture
Through Civil Society Organization, the citizen will help safeguarding the performance of agencies on how they use the public budget and the way they deliver their services to people.
- CITIZEN ENGAGEMENT
Performance review
see the picture
The Development Budget Coordination Committee will publish the national government budgeting and performance of the programs and projects.
- MID-YEAR AND YEAR-END REPORTS
• COA examines how agencies use the funds given to them from national budget.
• DBM uses the COAs audit reports in confirming that the budget and performance of agencies, all expenses have been disbursed in accordance with accounting regulations, and issues regarding on the usage of fund.
AUDIT
• COA examines how agencies use the funds given to them from national budget.
• DBM uses the COAs audit reports in confirming that the budget and performance of agencies, all expenses have been disbursed in accordance with accounting regulations, and issues regarding on the usage of fund.
AUDIT
The role of the private sector and the participation of non-governmental, community-based, or sectoral organizations are recognized in the 1987 Philippine Constitution:
1987 PHILIPPINE CONSTITUTION
The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.
Article II, Section 20 -
The State shall encourage nongovernmental, community-based, or sectoral organizations that promote the welfare of the nation.
Article II, Section 23 -
The State shall encourage nongovernmental, community-based, or sectoral organizations that promote the welfare of the nation.
Article II, Section 23 -
consistently acknowledges the significant role of people participation in local governance.
The Local Government Code of 1991
- Local government units shall promote the establishment and operation of people’s and non-governmental organizations to become active partners in the pursuit of local autonomy.
Section 34. Role of People’s and Non- governmental Organizations.
- Local government units may enter into joint ventures and such other cooperative arrangements with people’s and non- governmental organizations to engage in the delivery of certain basic services, capability-building and livelihood projects, and to develop local enterprises designed to improve productivity and income, diversity agriculture, spur rural industrialization, promote ecological balance, and enhance the economic and social well-being of the people.
Section 35. Linkages with People’s and Non- governmental Organizations.
- A local government unit may, through its local chief executive and with the concurrence of the Sanggunian concerned, provide assistance, financial or otherwise, to such people’s and nongovernmental organizations for economic, socially-oriented, environmental, or cultural projects to be implemented within its territorial jurisdiction.
Section 36. Assistance to People’s and Non- governmental Organizations.
specifies provisions on expenditures, disbursements, accounting and accountability.
The Local Government Code
Local treasurers, accountants, budget officers, and other accountable officers shall, within thirty (30) days from the end of the fiscal year, post in at least three (3) publicly accessible and conspicuous places in the local government unit a summary of all revenues collected, and funds received including the appropriations and disbursements of such funds during the preceding fiscal year.
Section 352. Posting of the Summary of Income and Expenditures. -
It is the policy of the Philippine Government, in line with the principle that a public office is a public trust, to repress certain acts of public officers and private persons alike which constitute graft or corrupt practices or which may lead thereto.
There are several laws that provide for transparency and accountability in Governance. Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act outlines actions that constitute graft and corrupt practices for individuals in public office or for private individuals doing business with the government. The law also requires government officials to make their statement of assets and liabilities available to the public.
REPUBLIC ACT NO. 3019
(Approved, August 17, 1960.) (Section 16)
ANTI-GRAFT AND CORRUPT PRACTICES ACT Section 1. Statement of policy.
It is the policy of the Philippine Government, in line with the principle that a public office is a public trust, to repress certain acts of public officers and private persons alike which constitute graft or corrupt practices or which may lead thereto.
There are several laws that provide for transparency and accountability in Governance. Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act outlines actions that constitute graft and corrupt practices for individuals in public office or for private individuals doing business with the government. The law also requires government officials to make their statement of assets and liabilities available to the public.
REPUBLIC ACT NO. 3019
(Approved, August 17, 1960.) (Section 16)
ANTI-GRAFT AND CORRUPT PRACTICES ACT Section 1. Statement of policy.
It is the policy of the Philippine Government, in line with the principle that a public office is a public trust, to repress certain acts of public officers and private persons alike which constitute graft or corrupt practices or which may lead thereto.
There are several laws that provide for transparency and accountability in Governance. Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act outlines actions that constitute graft and corrupt practices for individuals in public office or for private individuals doing business with the government. The law also requires government officials to make their statement of assets and liabilities available to the public.
REPUBLIC ACT NO. 3019
(Approved, August 17, 1960.) (Section 16)
ANTI-GRAFT AND CORRUPT PRACTICES ACT Section 1. Statement of policy.
