Fiscal administration involves the management of financial resources including revenue generation, fund availability, and ensuring funds are spent wisely, lawfully, and efficiently. It is an important administrative responsibility. The key Philippine government agencies involved in fiscal functions are Congress, the Department of Finance, Department of Budget and Management, and Commission on Audit. The budget process involves preparation, authorization, implementation, and accountability stages at both the national and local levels.

2. OVERVIEW:Fiscal administration zeros in on the management of financial resources and those activities and operations to generate revenue, make those available, and see to it that funds are wisefully, lawfully, effectively and efficiently spent.

3. The administration of finances is an intrinsic component of management responsibility. There is an intimate linkage between administering and funding. An administrative act has financial implications. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONOVERVIEW:A decision to increase taxes increases revenue of government;

4. To implement social amelioration program creates a charge on revenue earned while at the same time distributes and disperses social benefits.

5. Because administrative activity is principally dependent upon availability of allocable financial resources, the management of finances becomes a very important administrative responsibility.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONORGANIZING FOR FISCAL ADMINISTRATION:Fiscal activity is present in all levels of the organization, whether line or staff; top management level through middle management; the rank and file.

6. Top management is most interested in it; middle management is deeply involved in it; the rank and file is affected by whatever results from it. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONORGANIZING FOR FISCAL ADMINISTRATION:The principal agencies tasked with fiscal functions:Congress, especially the Lower House, Department of FinanceDepartment of Budget and ManagementCommission on Audit

7. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONORGANIZING FOR FISCAL ADMINISTRATION:Functions of the Finance Department:Revenue generation and collection,Fund custodyDisbursements Keeping of accounts

8. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONORGANIZING FOR FISCAL ADMINISTRATION:Review of estimates and fiscal policy studies are done by the Department of Budget and Management in close consultation with the National Economic Development Authority;

9. The Central Bank and other economic planning entities of the state to see to it that fiscal plans and programs are geared towards national development. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONORGANIZING FOR FISCAL ADMINISTRATION:The Commission on Audit conducts fund and performance audit to see to it that expenditures are in accordance with the Appropriation Law approved

10. Congress is responsible for revenue and expenditure policies.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONFISCAL CONTROL MECHANISMSFOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL THROUGH THE BUDGET:Prevent Misappropriation of Fundsrequires review and approval by the administrative official of the line or operating agency, of all requests for money releases and budgetary allotments, vouchers and similar papers before payments are made so that expenditures are in accordance with policy and law and not irregular, unnecessary, excessive, extravagant and unconscionable. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONFISCAL CONTROL MECHANISMSFOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL THROUGH THE BUDGET:Control to Implement Prospective Policyproactive administration inhibits governmental units from directly transacting and negotiating money matters since such kind of transaction is officially channeled through the Department of Budget and Management in the form of budget estimates as endorsed by the President.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONFISCAL CONTROL MECHANISMSFOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL THROUGH THE BUDGET:Ensure the Wisdom and Propriety of Expenditureclaims for payment from public funds, legality, prudence, reasonableness, the morality of the claim or charge should be established.

11. A review of existing contracts and transactions should be made.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONFISCAL CONTROL MECHANISMSFOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL THROUGH THE BUDGET:Prevent DeficitsFiscal supervision and control may be useful but should not unduly interfere with agency prerogative to carry out programs mandated by the constitution and the laws.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONBUDGETING CONCEPTSBudgeting may be of the: (1) Planning-Programming Budget System (PPBS) typegives assurance that the budget will help achieve desired agency results

12. unit head defends the budget, explains its contribution to the realization of agency goals, develops a cost projection for each program

13. submits this to top management which reviews the program and decides on the final budget allocation.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONBUDGETING CONCEPT(2) Zero-Base Budgeting (ZBB) typethe agency justifies the entire appropriation request for the fiscal year as if the programs are entirely new, instead of justifying only the increase requested above the previous year’s appropriation.

14. The agency is obligated to defend all programs every year and rank these in terms of priority using the ratio between cost and benefit criterion

15. provides opportunity for top management to re-evaluate the need for on-going programs, compare these with the proposed and the prioritized for implementation.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONBUDGETING CONCEPT*** Both are special budgeting types to minimize drawbacks of traditional method wherein budget requires are based on current projects continuing year after year and where requests for new programs are made without a clear idea of how it will contribute to the achievement of overall agency goals ***

16. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONLINE ITEM versus PERFORMANCE BUDGETINGBudgeting may also be:(1) Line-Itemobject of the expenditure type

17. consists of a detailed listing of every position to be filled

18. gives the legislative body tremendous discretion to strike out or to approve individual items

19. funds appropriated may not be transferred from one category of expense to another.

20. Also known as “rule of thumb” budgeting where figures of past years are reflected but without income indicatorsPHILIPPINE PUBLIC FISCAL ADMINISTRATIONLINE ITEM versus PERFORMANCE BUDGETINGThree columns of figures appear in each budget sheet:(a) actual expenditure for each object during the previous fiscal year(b) estimated amounts to be spent for the same objects for the current fiscal year.(c) amount desired for the same objects for the incoming or future fiscal year

21. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONLINE ITEM versus PERFORMANCE BUDGETING(2) Performance Budgetingis lump-sum budgeting

22. is program budgeting which spells out functions, activities and projects

23. allow transfer of funds from one organizational unit to another, between work activities and objects to be spent for.

24. There is a difficulty in identifying what work units perform or not perform, since its most important concern is the overall performance of the agency.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONNEW POLICY GUIDELINES FOR BUDGETINGBased on this agenda: the formulation of the national budget must be in the context of a three-year planning framework

25. expenditures must achieve program targets and support development strategy. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONNEW POLICY GUIDELINES FOR BUDGETINGAgency programs will be supportive of the identified priority areas which include the following:modernization of the agricultural sector to augment farmer income, bolster production and attain food securityimprovement of the quality of basic social services like health and sanitation, nutrition, education, social welfare and housingacceleration of countryside infrastructure development

26. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONNEW POLICY GUIDELINES FOR BUDGETINGAgency programs will be supportive of the identified priority areas which include the following:enhancement of global competitiveness through liberalization, deregulation, and privatizationprovision for macroeconomic stability by instilling fiscal discipline, prudent government spending and efficient revenue generationreform in governance to make it responsive to the current domestic and global environment

27. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONPRINCIPLES FOR AGENCY GUIDANCE (1) Prudent Spendingcalls for rational fund allocation

28. scaling down or phasing out devolved or non-essential activities

29. doing away with duplicating functions; moratorium on increasing personnel and setting up new units

30. adopting a system for reasonable use of supplies, materials and facilities.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONPRINCIPLES FOR AGENCY GUIDANCE(2) Entrepreneurial Budgetingthis involves mobilization of government resources for development programs

31. improving front-line public services

32. requiring the agencies to study their fee structure in order to recover expenditure for specific services rendered.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONPRINCIPLES FOR AGENCY GUIDANCE(3) Performance-Based Budgetingkey results areas (KRA’s) and commitment for specific programs are indentified to optimize effective use of resources. (4) Wholistic Budgetingexpenditure levels of regional units are provided by the agency as guide for preparing the regional budget.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONPRINCIPLES FOR AGENCY GUIDANCE(5) Consistency with Sub-Sectoral Development Objectiveslike that of the Technical Education and Skills Act of 1994 (TESDA)

33. Research and Development (R&D) in the material, technological and engineering sciences, implementation of the Systems Designated Statistics pursuant to Executive Order 352.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONINCOME SOURCESTwo general sources of government income :(1) Tax Revenueincome tax

34. property tax

35. domestic goods and services tax

36. international trade and transactions tax , sales

37. value added tax (VAT).PHILIPPINE PUBLIC FISCAL ADMINISTRATIONINCOME SOURCESTwo general sources of government income :(2) Non-Tax Revenueoperating and service income– revenue from the operations of national and local government and government corporations

38. income from public enterprises and investments – income received for the use of financial assets dividends; net rent for the use of government land and royalty for the use of copyrights and patents owned by the government.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONINCOME SOURCESTwo general sources of government income :(2) Non-Tax Revenuemiscellaneous income–revenues not classified under other categories such as sale of goods and merchandise confiscated, waste materials; inventory adjustments and gains on exchange rate.

39. capital revenue – income derived from the sale of capital assets like buildings, equipment, machines, land and intangible assets like patent, copyright and trademarkPHILIPPINE PUBLIC FISCAL ADMINISTRATIONINCOME SOURCESTwo general sources of government income :(2) Non-Tax Revenuegrants –non-repayable transfers received from other levels of the government, private sector or international institutions.

40. borrowings– includes domestic and foreign debts, regardless of source, whether in cash or in kind.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONAPPROPRIATIONS AND OBLIGATIONSThese are estimates and projections of what the departments and agencies incur or expect to incur. These include:New General Appropriations – as provided for in the General Fund, Fiduciary Fund or Special Account in the General FundSupplemental Appropriations – these are stand-by appropriations authorized by Congress apart from the programmed appropriations for a given fiscal year.

41. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONAPPROPRIATIONS AND OBLIGATIONSAutomatic Appropriations –expenditures authorized by specific laws like Commonwealth Act 186 and Republic Act 660 for retirement and insurance premiums of government employees; Presidential Decree 1234 and other laws for special accounts and funds; grant proceeds; custom duties and taxes; proceeds from the sale of non-serviceable, obsolete and unnecessary equipment ; net lending; interest payment for national debt; amortization for domestic and foreign debts as per Presidential Decree 1967 and Republic Acts 4860 and 245.

42. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONAPPROPRIATIONS AND OBLIGATIONSContinuing Appropriations – obligations provided under Executive Order No. 182 known as Public Works Act for Multiyear infrastructure Projects; agrarian reform; unobligated allotments for maintenance and other operating expenses and unreleased appropriations for maintenance and other operating expenses and capital outlays as provided by RA 8250 and RA 8522.

43. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONAPPROPRIATIONS AND OBLIGATIONSBudgetary Adjustments –transfers to the reserve fund; transfer from the agrarian reform fund; organizational adjustment fund; general fund adjustment; miscellaneous personnel benefits; contingency fund; sale of military camps; countrywide development; Pinatubo assistance resettlement and development and unprogrammed projects.

44. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE BUDGET The budget is a management tool to account for what has been received

45. how this will be spent at a given period of time. How a government forecasts and allocates its income and expenditures is illustrated in the budget document.

46. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE BUDGETPHILIPPINE NATIONAL BUDGETThe National Budget represents the estimate of expected income and projected expenditures over a period of time referred to as the fiscal year. It is what government plans: (1) to spend for its programs and projects (2) where the money will come from

47. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE PHILIPPINE BUDGETARY PROCESSSection 22, Article VII of the 1987 Constitution sets the tone for the budgetary process. Under this Article, the President submits to Congress within thirty days from the opening of every regular session, a financial plan of expenditures and sources of financing, including receipts from existing and proposed revenue measures as basis for a general appropriations bill.

48. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE PHILIPPINE BUDGETARY PROCESSThe Philippine Budget undergoes four stages: (1) Budget Preparation - the determination of budgetary priorities and activities guided by the overall national development plan with the ceilings and constraints imposed by available revenues and borrowing limits.

49. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE PHILIPPINE BUDGETARY PROCESSThe Philippine Budget undergoes four stages:(2) Budget Authorization – the President submits the overall budget to Congress in the form of detailed Expenditure Program accompanied by the Budget of Expenditures and Sources of Financing; the Budget Message of the President, and the Regional Allocation of the Expenditure Program.

50. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE PHILIPPINE BUDGETARY PROCESSThe Philippine Budget undergoes four stages:(3) Budget Implementation – after the President signs the General Appropriations Act into law, the Department of Budget and Management requires the different agencies of government to submit their respective work and financial work plans.

51. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE PHILIPPINE BUDGETARY PROCESSThe Philippine Budget undergoes four stages:(4) Budget Accountability – evaluation of actual performance and initially-approved work targets, obligations incurred,

52. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE PHILIPPINE BUDGETARY PROCESSPersonnel hired and work accomplished by comparing all these with the targets set at the time agency budgets were approved.

53. Performance and cost effectiveness of agencies are evaluated since no results can be obtained if agency efficiency is slow and funds are wastefully spent

54. Detailed examination of the agency’s book of account is undertaken to ensure that all expenses have been disbursed for the purpose for which the funds have been authorized.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONLOCAL FISCAL MANAGEMENTFUNDAMENTAL PRINCIPLES The Local Government Code of 1991 requires local governments to formulate sound financial plans.

55. Local budget plans and goals must harmonize with national development plans, strategies and goals to optimize utilization of resources, fiscal or physical. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONLOCAL FISCAL MANAGEMENTFUNDAMENTAL PRINCIPLES Local government units should incorporate the needs and requirements of their component units and equitably allocate resources among said units.

56. The most basic limitation is the requirement that all local government units should endeavor to have balanced budget for every fiscal year of its operation.PHILIPPINE PUBLIC FISCAL ADMINISTRATIONBUDGET FORM AND CONTENT Two parts Of Local government budget estimate of incometotal appropriations covering the current operating expenditures and capital outlays

57. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONBUDGETARY REQUIREMENTSThe budget of local government units for anyfiscal year shall comply with the following:(a) the aggregate amount appropriated shall not exceed the estimates of income(b) full provisions shall be made for all statutory and contractual obligations of the local government unit concerned, provided the amount of appropriations for debt servicing shall not exceed twenty percent (20%) of the regular income of the local government unit concerned.

58. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONBUDGETARY REQUIREMENTSThe budget of local government units for anyfiscal year shall comply with the following:(c) aid to component barangays shall be provided in amounts of not less than one thousand pesos (P1,000.00) per barangay.(d) five percent (5%) of the estimated revenue from regular resources shall be set aside as an annual lump-sum appropriation for unforeseen expenditures arising form the occurrence of calamities

59. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONBUDGETARY PROCESS AT THE LOCAL GOV’T LEVELThe stages of are analogous to that of the national level of government. Four basic steps are also observed. (1) Budget Preparation (2) Budget Authorization (3) Budget Implementation (4) Budget Review

60. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONAUDIT OF FUNDS Accounting of Funds as a management tool is best ensured by the audit function.

61. It is a component of the budgetary process since it is a mechanism for determining whether the expenditures are legal and desirable. TWO TYPES OF AUDIT:Pre-AuditPost-Audit

62. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTWO TYPES OF AUDITPre-Audit – This is audit performed before money is actually spent and takes place before payment of an obligation or before the expense is incurred. Post-Audit – This is audit after money has been spent in order to find out whether funds are spent in accordance with the approved appropriation.

63. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONEnd of Presentation

64. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONReference: AvelinoP. Tendero