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CHAPTER 8

DECENTRALIZED ACCOUNTING SYSTEM



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TRANSACTIONS/ILLUSTRATIONS

AJE/TB/BAL.SHEET/INCOME STATEMENT

CLOSING ENTRIES/ POST TB/ CONSO. F/S

Intro to Decentralized System of Acctg



RO and OU of Natl govt

offices have been

established long before the

adoption of IRP.

And to substantiate the

reorganization scheme and

attain decentralization, the

IRP also directed the

delegation of general &

specific powers to the Ros.

Ya! Now lets move on and

know what decentralized

accounting system is.

so how come that thegovernment accounting

system is said to be

decentralized?

Natl government agenciesw/ established regional

acctg offices adopt a HO-

Branch Acctg system known

as the DECENTRALIZED

ACCTG SYSTEM.

Now you know!A complete set of books of

accts are kept & maintained

by the acctg units of RO

&OU to reflect their

financial conditions.

Inter-office transfer of

accounts or reciprocal accts

are used to reflect inter-

office transactions.

These inter-office accounts

are reconciled and

eliminated in the process of

consolidation.

Hi there! do you know that

Decentralization is not a

new innovation in the

government service?

It was the IRP, w/c provided

the rational & uniform

pattern of field

organization.

now you know.:

LETS MOVE ON!



Regional Accountants are required

to submit the following

accountability reports unlessrevised/amended by guidelines to

be issued by the COA.

Accounting Reportsnext



�Monthly Trial Balance

�Monthly Report of CashDisbursements

�Monthly Report of Checks

Issued & Cancelled

Monthly Reports

next Monthly



�Q uarterly Trial Balance

�Q uarterly Statement of Subsidiary Ledger Balances�Statement of Collecting officers Account Balances

�Statement of Disbursing Officers Account Balances

�Statement of Other Officers Balances

Q uarterly Reports

next QUARTERLY



�Statement of Accounts Payable

�Statement of Accounts Receivable�Detailed Statement of Subsidiary Ledger Balances, except

the Statement of Disbursing Officers Acct Bal, and

Statement of Other Officers Balances of quarterly reporting

Semi-Annual Reports

next Semi-Annual



�Preliminary Trial Balance (Pre-closing Trial Balance)

�Final Trial Balance

Annual Reports

next Annual



GENERALLY, the DBM

releases the regional

allotments and other

budgetary releases through

the CO of the dept.

Therefore, the receipts of

funds by the RO and OU

may take two forms.

And as illustrated:

And know lets talk about

ALLOTMENT AND NOTICE

OF CASH ALLOCATION FOR

REGIONAL OFFICE

However, at times it may be

released by the DBM to the

RO of the NGA and

instrumentalities

Allotment and Notice of Cash Allocation



1. Allotments and Notice of cash allocation directly f rom the DBM:

Illustration: the Regional Office and Operating Unit of Agency A, a national

govt agency, received the following allotments and NCA directly from the

DBM.

ALLOTMENTS (MOOE):Regional Office = 10,000,000

Operating Unit = 4,000,000

NCA:

Regional Office = 8,000,000

Operating Unit = 3,000,000

next



Date Ref . P.P.A. Account code Allotment

received

Obligation incurred balance

10, 000, 000 10, 000, 000

Books of RO:

Books of OU:

Date Ref . P.P.A. Account code Allotment

received

Obligation incurred balance

4, 000, 000 4, 000, 000

To record receipt of allotment f rom DBM:

next



To record receipt of NCA

Books of Regional office:

Account title Account code Debit credit

Cash National Treasury, MDS 108 8,000,000

subsidy income from Natl govt. 651 8,000,000

next

Books of Operating Unit:






2. Transfer of Allotments and funding check f rom the CO/RO in case of the Operating Unit, (known as sub allotments)

next

� Illustration:

the CO of Agency X directly received from the DBM allotment for MOO

E and its corresponding NCA in the amount of P10,000,000 and P8,000,000

respectively. Of these receipts the CO transferred the following to the RO:

Allotments, P5,000,000; NCA, P4,000,000. Likewise, the RO transferred

part of the sub-allotment and NCA to its Operating Unit: allotments,

P2,000,000; NCA, P1,500,000.



BOOKS OF CENTRAL OFFICE

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

Maintenance and Other Operating Expenses(RAOMO)

AGENCY X Central Office

Date Ref . P.P.A. Account Code Allotment

Received

Obligation

Incurred

Balance

10,000,000 10,000,000

next

To record receipt of allotments f rom DBM






To record receipt of NCA f rom DBM.

Books of Central Office:

To record transfer of sub-allotment to RO.REGISTRY OF ALLOTMENTS AND OBLIGATIONS

Maintenance and Other Operating Expenses(RAOMO)

AGENCY X Central Office

Date Ref . P.P.A. Account

Code

Allotment

Received

Obligation

Incurred

Balance

10,000,000 10,000,000

(5,000,000) 5,000,000

next



To record receipt of sub-allotment f rom CO.


Maintenance and Other Operating

Expenses(RAOMO)

AGENCY X Regional OfficeDate Ref . P.P.A. Account

Code

Allotment

Received

Obligation

Incurred

Balance

5,000,000 5,000,000

Books of Regional office

next




Subsidy income to RO 872 4,000,000

Cash-National Treasury, MDS 108 4,000,000

To record transfer of NCA to Regional office.



Cash in Bank Local currency CA 111 4,000,000

subsidy income from Central Office 653 4,000,000

To record receipt of NCA f rom Central Office.

Books of Regional Office:

next



To record transfer of Letter of Advice of Allotment to OU



Expenses(RAOMO)

AGENCY X Regional OfficeDate Ref . P.P.A. Account

Code

Allotment

Received

Obligation

Incurred

Balance

5,000,000 5,000,000

(2,000,000) 3,000,000

Books of Regional office

next



To record receipt of Letter of Advice of Allotment f rom RO



Expenses(RAOMO)

AGENCY X Operating Unit


Code

Allotment

Received

Obligation

Incurred

Balance

2,000,000 2,000,000

Books of Operating Unit

next




Subsidy to Operating Unit 873 1,500,000

Cash in Bank Local Currency CA 111 1,500,000

To record transfer of subsidy to Operating Unit

Books of Regional Office:

next

To record receipt of subsidy from Regional Office ( Operating Unit Books)

Account Title Acctcode Debit credit

Cash in Bank- Local Currency Current Acct 111 1,500,000

SIRO 654 1,500,000



Subsidy to RO/OU

Subsidy from CO/RO

Inter-office receivables

Inter-office payables

Under the DECENTRALIZED

ACCTG SYSTEM, the F/S of

the CO, RO, and OU should be CONSOLIDATED

The following accounts are

reconciled and eliminated:

Consolidation of Financial Statements



Transaction 1: Received the following allotments directly from DBM:

Personal MOOE Cap. Outlay

services

Central Office 250,000 150,000 900,000

Regional Office 200,000 100,000 500,000

Operating Unit 100,000 50,000 350,000

next




Personal Services (RAOPS)

AGENCY ABC Central Office


Code

Allotment

Received

Obligation

Incurred

Balance

250,000 250,000

To record the allotments received in the respective Registry of Allotments and

Obligations.


next




MAINTENANCE AND OTHER OPERTAING

EXPENSES(RAOMO)



Code

Allotment

Received

Obligation

Incurred

Balance

150,000 150,000


next




CAPITAL OUTLAY(RAOCO)



Code

Allotment

Received

Obligation

Incurred

Balance

900,000 900,000


next



Regional Office Books:(RAOPS)

Date Ref PPA Account code Allotment

received

Obligation

incurred

Balance

200,000 200,000


received

Obligation

incurred

Balance

100,000 100,000

(RAOMO)

next



(RAOCO)


(RAOPS)

(RAOMO)

Date Ref PPA Acct code Allotment recvd Obligation incurred balance

500,000 500,000

Date Ref PPA Acct code Allotment recd Obligation incurred Balance

100,000 100,000

Date Ref PPA Acct code Allotment recd Obligation incurred Balance

50,000 50,000

next



Date Ref PPA Account code Allotment received

Obligation incurred

Balance

350,000 350,000

(RAOCO)

next



Transaction 2:Received NCA directly from the DBM.

Central Office 1,300,000

Regional Office 800,000

Operating Unit 500,000

To record receipt of NCA.

CO BOOKS

Cash NT,MDS 1,300,000

SING 1,300,000

next



RO books

Cash NT,MDS 800,000

SING 800,000

Operating Unit books

Cash NT,MDS 500,000SING 500,000

Transaction 3:Release of sub-allotment from CO to RO.

Personal services 100,000

Maintenance and Other Operating Expenses -40,000

Capital Outlay 650,000

next





RAOCO

To record receipt of sub-allotment from CO.( RO Books)

RAOPS

Date Ref PPA Account code Allotment received Obligation incurred Balance

900,000 900,000

(650,000) 250,000

Date Ref PPA Account code Allotment received Obligation

incurred

Balance

200,000 200,000

100,000 300,000

next



RAOMO

RAOCO

Date Ref PPA Account code Allotment Received Obligation

incurred

balance

100,000 100,000

40,000 140,000


incurred

balance

500,000 500,000

650,000 1,150,000

next



Illustration 4:

Release of Letter of Advice of Allotment from RO to Operating unit.

Personal Services 40,000

Maintenance and Other Operating Expenses 15,000

Capita Outlay 400,000

To record transfer of Letter of Advice of Allotment to Operating Unit. (RO Books)

RAOPS


incurred

balance

200,000 200,000

100,000 300,000

(40,000) 260,000

next



RAOMO

RAOCO


incurred

balance

100,000 100,000

40,000 140,000

(15,000) 125,000

Date Ref PPA Account code Allotment received Obligation incurred balance

500,000 500,000

650,000 1.150,000

400,000 750,000

next



To record receipt of Letter of Advice of Allotment from RO.(Operating Unit Books)

RAOPS

RAOMO


incurred

balance

100,000 100,00040,000 140,000


incurred

Balance

50,000 50,000

15,000 65,000

next



RAOCO

Transaction 5:Transfer of subsidy from CO to RO, P790,000.

To record transfer of subsidy to RO. (CO Books)

Subsidy to Regional Office 790,000

Cash NT,MDS 790,000


received

Obligation

incurred

balance

350,000 350,000

400,000 750,000

next





Transaction 7:Payment of the ff payrolls through cash disbursing officer.

CO RO OU

Salaries and wages Reg. Pay 125,000 226,000 118,000

Addtl. Compensation 5,000 8,000 4,000PERA 10,000 16,000 3,000

Deductions:

W/holding tax payable 14,000 25,000 13,000

GSIS Payable 6,000 12,000 5,000

Pag-ibig Payable 2,000 3,000 2,000

Net Amount 118,000 210,000 110,000

next



To record expenses and deductions.

(CO Books)

Salaries and wages regular pay 125,000

Additional Compensation 5,000

PERA 10,000

Due to BIR 14,000

Due to GSIS 6,000

Due to Pag-ibig 2,000

Due to officers and employees 118,000

next



(RO Books)

Salaries and wages regular 226,000


PERA 16,000

Due to BIR 25,000

Due to GSIS 12,000



next



(Operating Unit Books)

Salaries and wages regular 118,000


PERA 8,000

Due to BIR 13,000

Due to GSIS 5,000



next



To record the grant of cash advance to disbursing officer .

(CO Books)

Payroll fund 118,000

Cash NT,MDS 118,000

(RO Books)


Cash NT,MDS 210,000


Payroll fund 110,000Cash NT,MDS 110,000

next



To record liquidation of cash advance.

(CO Books)



(RO Books)




Due to officers and employees 110,000Payroll fund 110,000

next



Transaction 8:Remittance of the foregoing deductions (no Tax Remittance Advice)

(CO Books)

Due to BIR 14,000

Due to GSIS 6,000Due to Pag-ibig 2,000

Cash NT,MDS 22,000

(RO Books)

Due to BIR 25,000

Due to GSIS 12,000

Due to Pag-ibig 3,000Cash NT,MDS 40,000

next





Transaction 9: Received the following bills:

Electricity Telephone

Central Office 30,000 10,000

Regional Office 40,000 15,000

Operating Unit 8,000 5,000


Account Title Account

Code

Debit Credit

Electricity Expense 767 30,000

Telephone Expense - Landline 772 10,000

Accounts Payable 401 40,000

next



BOOKS OF REGIONAL OFFICE


Code

Debit Credit




BOOKS OF OPERATING UNIT


Code

Debit Credit




next



Transaction 10: Payment of foregoing bills:


Account Title Account Code Debit Credit

Accounts payable 401 40,000

Cash-NT, MDS 108 40,000

BOOKS OF REGIONAL OFFICE Account Title Account Code Debit Credit


Cash-NT, MDS 108 55,000


Account Title Account Code Debit Credit


Cash in Bank - LCA 111 13,000

next





Account title Account

code

Debit Credit

Advances to Officers and Employees 148 10,000

Cash NT,MDS 108 10,000




code

Debit Credit

Advances to Officers and Employees 148 12,000

Cash in Bank LCA 111 12,000

next



Transaction 12:

Liquidation of the foregoing cash advance. Actual travelling expenses: CO P5,000;

RO P8,000; OU P7,000



code

Debit Credit

Travelling Expenses Local 751 5,000

Advances to Officers and

Employess

148 5,000

next





code

Debit Credit

Travelling Expenses Local 751 8,000


Employees

148 8,000


code

Debit Credit

Travelling Expenses Local 751 7,000Advances to Officers and

Employees

148 7,000


next



Transaction 13:

Collection of refund for excess from the foregoing cash advance for travel.


Account title Account code

Debit Credit

Cash Collecting Officer 102 3,000


Employees

148 3,000

next





code

Debit Credit



Employees

148 2,000



code

Debit Credit



Employees

148 5,000

next



Transaction 14: Deposit of the foregoing collections to the National Treasury.



code

Debit Credit

SING 651 3,000




code

Debit Credit

SING 651 2,000


next




code

Debit Credit

SING 651 5,000



next



Transaction 15:

Payment of the following rentals: CO P12,000; RO P18,000; OU P10,000



code

Debit Credit

Prepaid Rent 177 12,000

Cash NT, MDS 108 12,000

next





Transaction 16:

Purchase of the following office supplies: Central Office P30,000; Regional Office

P35,000; Operating Unit P20,000



code

Debit Credit

Office Supplies Inventory 155 30,000

Due BIR 412 3,000


next




code

Debit Credit


Due BIR 412 3,000





code

Debit Credit


Due BIR 412 2,000


next



Transaction 17:

Issuance of the following purchase order for the purchase of office equipment: CO

P50,000; RO P135,000; OU P120,000


REGISTRY OF ALLOTMENTS AND OBLIGATIONSCAPITAL OUTLAY (RAOCO)



Received

Obligation

Incurred

Balance

900,000 900,000(650,000) 250,000

50,000 200,000

next



Date Ref . P.P.A. Account Code Allotment Received

Obligation Incurred

Balance

500,000 500,000

650,000 1,150,000

(400,000) 750,000

135,000 615,000



CAPITAL OUTLAY (RAOCO)

AGENCY ABC Regional Office

next






AGENCY ABC Operating Unit


Received

Obligation

Incurred

Balance

350,000 350,000

400,000 750,000

120,000 630,000

next



Transaction 18: Received the following office equipment.

BOOKS OF CENTRAL OFFICE Account title Account code Debit Credit

Office Equipment 221 50,000

Due to BIR 412 5,000



Account title Account code Debit Credit

Office Equipment 221 135,000

Due to BIR 412 13,000


next





Transaction 19:

Payment of the foregoing payables for office supplies and office equipment purchased.




Cash NT, MDS 108 72,000

next






Cash in Bank LC,CA 111 154,000




Cash in Bank L

C,CA 111 126,000

next



Transaction 20:

Entered into contracts for the construction of the buildings: CO P200,000; RO

P600,000; OU P500,000



CAPITAL OUTLAY (RAOCO)AGENCY ABC Central Office


Received

Obligation

Incurred

Balance

900,000 900,000

(650,000) 250,000

50,000 200,000

200,000 -

next






AGENCY ABC Regional Office


Received

Obligation

Incurred

Balance

500,000 500,000

650,000 1,150,000

(400,000) 750,000

135,000 615,000

600,000 15,000

next






AGENCY ABC Operating Unit

Date Ref . P.P.A. Account Code Allotment Received

Obligation Incurred

Balance

350,000 350,000

400,000 750,000

120,000 630,000

500,000 130,000

next



Transaction 21: Payment of the 15% mobilization fee for the foregoing buildings to be

constructed.



Advances to Contractors 181 30,000

Cash NT, MDS 108 30,000



Advances to Contractors 181 90,000Cash NT, MDS 108 90,000

next







next



Transaction 22:

Received the following first progress billings for the construction of the buildings: CO

P150,000; RO P400,000; OU P300,000



code

Debit Credit

Construction in Progress Agency Asset 264 150,000



next




code

Debit Credit







code

Debit Credit




next



Transaction 23: Payment of the foregoing accounts payable for the first billings.



code

Debit Credit


Due to BIR 412 15,000

Cash NT, MDS 108 105,000


code

Debit Credit


Due to BIR 412 40,000

Cash NT, MDS 108 270,000


next




code

Debit Credit


Due to BIR 412 30,000

Cash NT, MDS 108 195,000


next



Transaction 24: Remittance of the foregoing withholding taxes




Due to BIR 412 15,000

Cash NT, MDS 108 15,000


Due to BIR 412 40,000

Cash NT, MDS 108 40,000

next





Due to BIR 412 30,000


next






code

Debit Credit

Office Supplies Expense 755 30,000





code

Debit Credit

Office Supplies Expense 755 14,000


next



Transaction 26:

Received the following final billings for the completion of the buildings being

constructed: Central Office P50,000; Regional Office P200,000; Operating Unit

P200,000.



code

Debit Credit



next




code

Debit Credit





code

Debit Credit




next



Transaction 27:

Payment of the foregoing accounts payable for the completion of the buildings.



code

Debit Credit


Due to BIR 412 5,000

Cash NT, MDS 108 45,000

next





code

Debit Credit


Due to BIR 412 20,000




code

Debit Credit


Due to BIR 412 20,000

Cash NT, MDS 108 180,000

next



Transaction 28:

Transfer of Construction in Progress account to Buildings account upon completion of

the construction.



code

Debit Credit

Office Buildings 211 200,000


next




code

Debit Credit





code

Debit Credit




next



CHAPTER 8

DECENTRALIZED ACCOUNTING SYSTEM



Contents Excel link Credits

ExitHelpHelp



Illustration 29: (Adjusting Journal Entries)

Adjustments of prepaid rent to recognize the following actual rent

expenses for the period:

Central Office = 8,000

Regional Office = 15,000A

Operating Units = 7,000

next



Account Title Acct. Code Debit Credit

Rent Expense 782 8, 000

Prepaid Rent 177 8, 000




Books of Central Office

Books of Regional Office

next







next



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