Basic Competency for Local Treasury Examination Notes

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E-SRE (Electronic Statement of Receipts and
Expenditures)
What is Statement of Income and Expenditure(SIE) and
is Electrnoic-Statement of Receipts and Expenditure?
Statement of Income and Expenditure which purpose
was establishing and maintaining a comprehensive
system of reliable, understandable, timely and accurate
financial reporting and tracking system on the fiscal and
financial performance of LGU as the Joint Memorandum
Circular of Department of Finance(DOF) and Department
of Budget Management (DBM) for collecting and
monitoring financial information and performance of
LGUs upgrading the SIE system instituting the Electronic
Statement of Receipts and Expenditure (E-SRE).
The Electronic Statement of Receipts and Expenditure (E-
SRE) is electronic statement of receipt and expenditures
is the official Reporting System of the Department of
Finance (DOF) on Local Government Fiscal and Financial
Matters to be maintained by the BLGF
Statement of Receipts and Expenditures define as a
mode of financial performance monitoring established
and maintained to sustain an accurate and timely LGU
database that could readily accessed by the stakeholders
SRE is the improved format of SIE, harmonized with the
New Government Accounting System (NGAS) of COA,
which fairly presents the operating performance of LGUs,
in terms of operating incomeand expenditures, non-
income receipts and non-operating expenditures and the
Fund Balance. SRE also includes the financial
performance indicators thatserve as the basic gauge in
assessing LGU fiscal and Financial status.
If SRE is just an upgraded system of SIE, why they
change the income into receipts?
The word ‘income’ had been replaced by ‘receipts’
tobroaden its coverage and include proceeds from loans,
sales of assets, and etc. Likewise, expenditure is classified
into operating and non-operating to distinguish outright
expense from capital and investing outlay and loan
payments
Who created the E-SRE System?
1. Bureau of Local Government Finance (BLGF)
2. Asian Development Bank (ADB)
3. World Bank (WB)
When is the deadline for submission of E-SRE Reports?
i. For the first three quarterly reports –On or
before 20 of the month following the end of
the quarter (April 20, July 20, October 20)
ii. For the Year end Report – on or before
February 28 of subsequent calendar year
What is Revenue Generation Program?
Revenue Generation Program. The Revenue Generation
Program is a continuous undertaking to improve LGUs´
performance in generating locally sourced income,
mainly from real property tax which is the LGUs’ major
and most stable incomesource, business taxes, fees and
charges, and receipts from the operation of
economicenterprises.
Purpose of SRE
1. LGU Monitoring System - LGU financial
performance can be evaluated through the data
inputted to the system based from the reports
submitted by the LGUs
2. Policy Development - SRE offers sound financial
information to assist policymakers and
legislators in drafting local and national
legislations.
3. Policy Development - SRE offers sound financial
information to assist policymakers and
legislators in drafting local and national
legislations.
4. Forecasting and Planning - Consolidated data
are useful in planning, forecasting, debt
certification process, creditworthiness rating
system, LGU income classification system, etc.
5. Statistics - The SRE provides key data and
statistics like locally sourced income,external
sources and expenditures and such other
financial or fiscal statistics on LGU finance that
can be used to draw economic and fiscalcapacity
models.
Uses of SRE for the LGUs

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• The SRE serves as a basis of financial information/data
that are significant in the decision-making process of
LGUs.
• The SRE can be used as a tool in forecasting revenues
and estimating expenditures during the budget
preparation process.
• It can also be utilized to monitor the fiscal and economic
state of a LGU.
• The SRE reports containing the itemized monthly
collections anddisbursements of the LGU concerned may
be posted and published in compliance with Section 513
of the LGC.
• The SRE is used by Development Partners a precaution
before grants are given to LGUs.
Users of SRE
1. Department of Finance (DOF)
2. Department of Interior and Local Government
(DILG)
3. Municipal Development Fund Office (MDFO)
4. National Economic and Development Authority
(NEDA)
5. National Telecommunications Regulatory
Commission (NTRC)
6. Senate and Congress
7. Department of Budget and Management (DBM)
8. Bangko Sentral ng Pilipinas (BSP)
9. International Monetary Fund (IMF)
10. Potential Donors (ADB/WB)
11. Financial Institutions
12. Researchers/Academe
13. Local Government Unit (LGU)
REAL PROPERTY TAX
Real Property Tax - Revenues of the Local Government
Units are earned from their local and external sources.
One of these local sources is the Real Property Tax (RPT).
RPT is a property tax that is paid yearly. It is imposed on
all types of real properties including lands, buildings,
improvements, and machinery. To avoid excessive use of
such authority, limitations were established by setting
specific percentages for the ceiling and base rates.]
Who is responsible for the tax payment?
Responsible for the payment is the owner or
administrator of the property.
How much should be paid?
The RPT rate for the cities and municipalities in Metro
Manila is two percent (2%) while for provinces it is one
percent (1%).
To compute for RPT, the RPT rate is multiplied by the
assessed value of the property.
Assessed value is the fair market value of the real
property multiplied by the assessment level. It is
synonymous with taxable value. On the other hand, the
assessment level is the percentage applied to the fair
market value to determine the taxable value of the
property. It shall be fixed through ordinances imposed
by the city or provincial government. It can be as high as
twenty percent (20%) for residential land and fifty
percent (50%) for commercial and industrial lands.
LGUs may levy and collect an annual tax of one percent
(1%) on the assessed value of the real property which
shall be in addition to the basic real property tax. The
collection shall be accrued to the Special Education Fund
(SEF). Moreover, at the rate not exceeding five percent
(5%) of the assessed value of the property may be
imposed annually as an additional ad valorem tax on idle
lands.
What happens when RPT is not paid?
Failure to pay the RPT on the schedule will result in having
penalties. Late payments shall subject the taxpayers to
the payment interest at the rate of two percent (2%) per
month on the unpaid amount to a maximum of seventy-
two (72%) percent or thirty-six (36) months.
Where can owners pay?
The Treasurer’s Office of the LGU is responsible for the
collection of RPT.
Are there exempted properties?
The following are exempted from the tax:
1. Charitable institutions;
2. Charitable institutions;

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3. Churches;
4. Cooperatives;
5. All lands that are exclusively used for religious,
charitable or educational purposes;
6. Those that are used by local water districts;
7. Government-owned or controlled corporations;
and machinery and equipment are used for
pollution control and environmental protection
8. Government-owned or controlled corporations;
and machinery and equipment are used for
pollution control, and environmental protection
are exempted from the tax.
9. Machinery and equipment are used for pollution
control and environmental protection
What are the terminologies that property owners need
to know and understand?
1. Ad Valorem Tax is a levy on real property
determined on the basis of a fixed proportion of
the value of the property.
2. Assessment Level is the percentage applied to
the fair market value to determine the taxable
value of the property.
3. Assessed Value is the fair market value of the
real property multiplied by the assessment level.
It is synonymous with taxable value.
4. Commercial Land is land devoted principally to
the object of profit and is not classified as
agricultural, industrial, mineral, timber, or
residential land.
5. Fair Market Value is the price at which a
property may be sold by a seller who is not
compelled to sell and bought by a buyer who is
not compelled to buy.
6. Improvement is a valuable addition made to a
property or an amelioration in its condition,
amounting to more than a mere repair or
replacement of parts involving capital
expenditures and labor, which is intended to
enhance its value, beauty or utility or to adapt it
for new or further purposes.
7. Industrial Land is land devoted principally to
industrial activity as capital investment and is
not classified as agricultural, commercial,
timber, mineral or residential land.
8. Machinery embraces machines, equipment,
mechanical contrivances, instruments,
appliances or apparatus which may or may not
be attached, permanently or temporarily, to the
real property. It includes the physical facilities for
production, the installations and appurtenant
service facilities, those which are mobile, self-
powered or self-propelled, and those not
permanently attached to the real property which
are actually, directly, and exclusively used to
meet the needs of the particular industry,
business or activity and which by their very
nature and purpose are designed for, or
necessary to its manufacturing, mining, logging,
commercial, industrial or agricultural purposes.
9. Residential Land is a land principally devoted to
habitation.