HOUSE BILL No. _5993

Introduced by Representative ARTHUR C. YAP
EXPLANATORY NOTE

This proposed measure seeks to bring Effectiveness and Efficiency to the management
of public finances.

Effectiveness is doing something with impact and efficiency is doing something well. The
first order task of budgeting is coming up with an annual budget and ensuring that it is
fully implemented. If you cannot implement an annual plan of expenditure—an annual
budget—then multi-year plans have little meaning. Making efficient the systems needed
to fully implement the annual budget is ensuring it is effective in financial management.

The objective of this reform is to strengthen the management of public finances. The
current system has adequate contro/ in place but the reforms that will be introduced here
will allow the government to now focus on management. The foundation of the reform is
‘an annual cash based appropriation with performance measured in terms of cash
disbursed (outturn) not obligation as is the current practice.

Obligations are intentions, cash disbursement is action and tangible proof that the policies

strengthen a key weakness of the current system—discipline. Discipline is the crucial link
between control and management. Financial discipline requires that controls be efficient
which in turn will allow senior officials to focus on how best to manage the delivery of

need

the government's very ambitious policies: doubling of infrastructure spending, ramping up
of social sector spending, and strengthening decentralization. In summary, the
performance of the current financial system is not up to delivering these policies and is
not acceptable.

Pda Dai atl Ee da nrg! Bb Dee pel

management and good prospects for growth. Public finances are adequately controlled
and cash is available to fully fund the annual appropriation. Budget execution by national

learned in previous and on-going reforms so that the “how it is done” can be fast-tracked


Office of the Comptroller General. The Budget Reform Bill (BRB) will establish a new
central finance agency—the Office of the Comptroller General (OCG) under the Office of
the President. The OCG will have 4 key roles under the reformed system as follows:

a. Appropriation Accounting. The OCG will prepare quarterly outturn reports by NGAs
and their programs and by other categories as needed. The OCG will submit in-year and
end-of-year outturn reports to Congress, DBM, BTr and COA.

b. Setting Standards. OCG will be responsible for ensuring intemal control by NGAs. It
will set standards for internal control including internal audit and inspection. It will also set
standards for NGA accounting and reporting in consultation with COA.

Consolidating Financial Reports. The OCG will ensure that NGAs promptly and
Sicurcenly propery tele Nreniclal stelarnertanci'wi prepare the conecidelad friancial
‘statement of government and submit to Congress, DBM, BTr and COA.

d. Oversight. The OCG will ensure that NGAs exercise prudent financial control.

a a sal
( ).

Reforming a government is difficult and reforming public financial management is

especially difficult and lengthy. With a clear focus and strong commitment, this reform can
be implemented and will have significant impact now.

In view of the foregoing, immediate passage of this bill is earnestly sought.


Republic of the Philippines
Representatives
(Quezon City

‘Seventeenth Congress
First Regular Session

House BiL_no.__5993

Introduced by Rep. ARTHUR C. YAP

“AN ACT TO REFORM THE BUDGET PROCESS BY ENFORCING GREATER
ACCOUNTABILITY IN PUBLIC FINANCIAL MANAGEMENT (PFM), eae

FISCAL SUSTAINABILITY, STRENGTHENING CONGRESS’ POWER OF

PURSE, INSTITUTING AN INTEGRATED PFM SYSTEM, AND INCREASING.
BUDGET TRANSPARENCY AND PARTICIPATION, AND FOR OTHER PURPOSES.”

PARTI
PRELIMINARY PROVISIONS
‘Section 1. Short Title. — This Act shall be known as the “Budget Reform Act of 2017."

Section 2. Declaration of Policy and Objectives. —\t is hereby declared the policy of the State
to ensure accountability and integrity in the use of public resources by ensuring transparency,
fecal responebsity,reste-orfertaton, ficiency, and efeciveness, his shel be uphekd trough
the establishment of an integrated system of planning, budgeting,

accounting, reporting and review of public finances. In light of these requirements, brite
pursue the following specific objectives:

(0) To ertorce the power of Congress fo authorise ll appropriations ani hold goverment
accountable in the use of public resources, as well as the responsibilty of all government
agencies to propose, execute and deliver committed results in the appropriations acts in

(2) To promote people's empowerment in the menagement of pubic resources by enforcing
their right to access information on, and to contribute in the formulation and
implementation of, the financial affairs of the govemment; and

(c) To strengthen the integration of pianning, budgeting, and performance management and

ensure ample safeguards in managing public finances, including through intemal controls,
reporting, and risk management.

‘Section 3. Scope and Coverage. — The provisions of this Act shall apply to the management of

revenues, expenditures, financing arrangements, and assets and liabilities of national

goverment agencies (NGAS} ‘govemment-owned or -controlled corporations (GOCCs), and
Jocal government units (LGUs) to the extent provided herein.

‘Section 4. Definition of Terms. — The following terms when used in this Act and the implementing
rules and regulations (IRR) shall be understood, as follows:

(a) Allotment refers to the authorization issued by the Department of Budget and
Management (DBM) for releases needing clearance in order for NGAs, GOCCs, or LGUs
to incur contractual commitments and disburse funds up to a certain amount, for a
specified public purpose, and within a specified period of time, in accordance with the
Appropriations Law,

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(©) Appropriations Lew roles to te legiiatve aubwrizaton for the contractual
commitments incurred by NGAs, GOCCs, or LGUs and actual disbursement of Public
Furs for pectic pute parpoeme comming w spaced parted of ene. The ray refer fo
either a general or special appropriations law,

(c) Cabinet refers to the Executive Secretary and the Secretaries of the Departments under
the Executive Branch;

(d) Extended Payment Period refers to the three month period in the following fiscal year
when payments can be processed and disbursed for goods and services received by the
end of the previous year and such payment shall be chargeable against the
Appropriations Law of the previous fiscal year,

(e) Fiscal Year refers to a period of twelve months commencing on January 1 until December
31;

(f) Government Agencies collectively refer to NGAs, GOCCs and LGUs,

outstanding capital stock. This includes Goverment Financial Institutions, govemment

(h) Government Financial Institutions refer to financial institutions in which the government
directly or indirectly owns the majority of the capital stock and which are either. (i)
registered with, or directly supervised by, the Bangko Sentral ng Pilipinas (BSP), or
(authorized to collect or transact funds or contributions from the public and place them
in financial instruments or assets such as deposits, loans, bonds and equity;

(i) Head of Agency refers to the head of the department or agency in the case of NGAs, the
Board of Directors or Trustees in the case of GOCCs as well as certain agencies which
are structured as such, and the local chief executive in the case of LGUs;

() Internal Audit is an independent and objective assurance in NGAs, GOCCs and LGUs
which is designed to add value, Aeholakystetshapseedlltsage trp atin
in @ systematic and disciplined approach to evaluate the effectiveness of risk
management, control and governance processes;

(k) Local Government Units refer to provinces, cities, municipalities, and barangays, as well
as autonomous regions authorized to be created in the Constitution,

ER raiid tay eel LOle mice Sa ony ae ee ce

(m) Program/Activity/Project reters to an item of appropriation in the GAA which refer to any
of the following:
Program — an integrated group of activities that contributes to an agency's continuing
objective. These are grouped under 3 main cost structures: General Administration and
‘Support, Support to Operations, and Operations.

Activity — is a work process that contributes to the fulfilment of a program, sub-program
or

Project —is a special agency undertaking within a definite timeframe and which is designed
to produce pre-determined goods or services;

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(0) Proposed National Budget refers to a financial plan of annual revenue and expenditures
to be submitted by the President to Congress that reflect national policies;

(0) Public Officials refer to elective and appointive officials and employees, in a permanent
‘or temporary capacity, whether in the career or non-career service, including military and
uniformed personnel, regardless of the rank, form or amount of compensation;

(9) Public Funds refer to the monies of si Government Agencies ronived, collected,
able from taxes, fees, charges, penalties, income, dividends, interest
coved ben ccataa external loans and grants, proceeds from the sale of assets, that
the Govemment has a legal right to retain and use and shall not include any money
received in error,

(q) Subsidiary refers to a corporation where at least a majority of the outstanding capital
Rancee Ser Cntr Sera aee and through one or more intermediaries,
bya m

(9) Treasury Single Account (TSA) refers to the account maintained by the Bureau of the
‘Treasury with the BSP or agent bank for a unified structure of government bank accounts
to enable consolidation and optimum utilization of government cash resources.

In this Act, the singular may be read as the plural and the plural may be read as the singular,
as the context requires.

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PART Il
ADDITIONAL ROLES AND RESPONSIBILITIES

Section 5. Congress. — The Congress shall, in addition to its powers under the Constitution and
existing laws, perform the following:

(a) Monitor and review government performance against the requirements of appropriations
and related laws, and hold Goverment Agencies accountable for their financial and non-
financial performance;

(b) Review reports on planned and actual performance, including the Statement of Fiscal
Policy, the Medium Term Fiscal Strategy, fiscal reports, annual plans of govemment
agencies, periodic and annual reports on government performance and performance of
government agencies; and

(c) Consider the consolidated annual financial statements of govemment prepared by the
Office of the Comptroller General (OCG) and the audited government agency reports by
the COA.

Congress shall undertake the foregoing through any of its existing committees, support offices
or one created for the purpose to strengthen the oversight role of Congress,

Section 6. President. — The President shall, in addition to his/her powers under the Constitution
and existing laws, perform the following:

(a) Approve the Statement of Fiscal Policy, and the Medium-term Fiscal Strategy for
submission to Congress;

(b) Approve the Budget Priorities Framework to identify the priority areas for goverment
spending and guide the budget preparation exercise; and

(c) Authorize changes in the functional, operational and organizational structure within and
among the DBM, Department of Finance (DOF), and National Economic and Development
Authority (NEDA), as may be necessary, to ensure the effective implementation of this
Act.

Section 7. Office of the Comptroller General. — To enhance the management of public finances,
there is hereby created an OCG under the supervision and control of the Office of the President
(OP) which shall perform the following functions:

(2) Monitor the performance of the annual cash appropriations of NGAs in terms of in-year
and end-of-year appropriation reports that compare disbursements to appropriations;

(0) Formulate measures on effective intemal controls including intemal audit, for the
implementation by Heads of Goverment Agencies, to ensure the integrity, accuracy,
completeness, and reliability of goverment financial and management systems;

(©) Oversee the operation of an integrated intemal control framework across Government

Agencies;

(d) Oversee the implementation of, and Goverment Agencies’ compliance with, accounting
and auditing rules and regulations promulgated by the COA:

(e) Oversee and manage the financial reporting of Goverment Agencies, including (1) to
monitor the periodic end ennusl management ane fnancial accounts with repard to
accuracy, timeliness, completeness, and compliance with this Act, standards, rules and
regulations; and (2) to consolidate the financial reports for submission to the President,
Congress, and COA;

(f) Oversee the operationalization of an integrated financial management information system;

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() Formulate competency-based human resource plies for poslions in PEM and oversea
the capacity development requirements on PFM formulated by the OCG and other

agencies;
(h) Coordinate with counterpart agency officials to ensure compliance with the foregoing
functions; and

(i) Perform such other functions as may be necessary to properly implement the provisions
under this Section,

‘The OCG shall be headed by the Comptroller General who shail be of the same rank as a
Frphapt Pelsbouslbeig gSaambdpheh pra nabreyplrlphacblin hoc aban sdbdnduta The

Section 8 Commission on Audit. — The COA shall, in addition to its powers under the
Constitution and existing laws, coordinate with the OCG for the proper enforcement of timely
accounting and reporting of public finances.

Section 9. Department of Budget and Management. — The DBM shall, in addition to its
‘mandates and functions under existing laws, perform the following:

(a) Prepare, in coordination with the agencies concerned, DOF, NEDA and OP in the

Deversprners euciat Cocsisneeon Cormnnee (Deco) the Statement of Fiscal Policy, the

Medium-term Fiscal Strategy, the Budget Priorities Framework, and the Mid-year and
‘Annual Fiscal Reports as required in this Act;

(b) Monitor and evaluate the financial and non-financial performance of NGAs;

(ce) eshiate si reviow S09 fom copie Retiree of Orca eet

laws and charters, in coordination with the DOF and the Governance Commission for

\GOCGe (GCE) eri approve tre renin ‘operate Gperntris tuxoete (OOGs) of Fe
GOCCs;

(d) Monitor and review, together with the Bureau of Local Government Finance (BLGF) under
the DOF and Department of the Interior and Local Govemment (DILG), the financial and
non-financial performance of LGUs; and

(e) Assess, together with the BLGF under the DOF and DILG, the PFM systems of LGUs and

assist them in designing and implementing PFM improvement measures.

‘To ensure the effective formulation and execution of fiscal policies, the Secretary of Budget
‘and Management shall lead the DBCC, with the Secretary of Finance, the Director General of the
NEDA Secretariat and a representative from the OP as members, and the Govemor of the BSP
as resource person,

Section 10. Department of Finance. — The DOF shall, in addition to its mandates and functions
under existing laws, perform the following:

(a) Monitor and manage fiscal risks to the government, including those from public-private
partnerships;

(b) Compile and publish goverment fiscal statistics in accordance with intemational
standards; and

(c) Formulate policies and standards for the acquisition and management of fixed assets by
NGAs.

5]


‘The Bureau of the Treasury (BTr) shail, in addition to its mandates and functions under existing
laws, perform the following:

(a) Manage the TSA maintained at the BSP or an agent bank, with the prior approval of the
‘Secretary of Finance,

(b) Put in place arrangements for the execution of duly authorized payments from the TSA,
which may include the appointment of banks to operate as agents of the National
Govemment with the prior approval of the Secretary of Finance;

(c) Manage the financial assets and liabilities of the government, including: haan

associated with debt Falls
financial investment; (i) appointment of dealers, assets managers and other agents to
support debt, cash and activities; (iv) maintenance of an

investment management
accurate record of the stock and flow of financial assets and liabilities; (v) tracking and
Teporting on fiscal risks related to the management of financial assets and liabilities; and
i prerateten ke Yon ahlensrnen vopars baned or tie To br tien
G.

(d) Issue instructions on the management and recording of financial assets and liabilities of
the government,

(e) Authorize the opening and closing of bank accounts of NGAs;

(f) Assist the NGAs in providing credible cash forecast for timely and accurate cash
Programming,

(g) Administer the release of cash requirements covering all types of transfers to LGUs; and
(h) Establish and maintain a consolidated registry of fixed assets of the National Govemment.

Section 11. National Economic and Development Authority. — The NEDA shall, in addition to
its mandates and functions under existing laws, perform the following:

(a) Coordinate with the Regional Development Councils (RDCs), on the formulation of
regional development plans and policies that are consistent with the established national
Priorities;

(b) Coordinate the formulation and implementation of an annual and medium-term public
SM Le ee
context of the preparation of the National Budget;

(c) Set standards for Goverment Agencies in proposing, assessing, monitoring and
evelopment pocies, plane end profacs inching those fenced by grants
and concessional loans; and

(d) Assist and support the capacity building of ROCs and LGUs in development planning and
investment programming.

Section 12. Heads of Government Agencies. — The heads of NGAs, GOCCs and LGUs shall,
in addition to responsibilities provided under existing laws, be responsible for the following:

(a) Keep the DBM and DOF informed of significant changes, issues, and risks that could
impact on the finances of the goverment;

Ce Ee ee te on eee
Priorities Framework, and the Proposed National Budget as required by the DBM;

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(c) Manage their respective agencies, including GOCCs, and other resources placed under
their supervision, in an efficient, effective and economic manner in order to deliver the
outputs and attain the outcomes set in their respective budgets;

(@) Monitor the physical and financial implementation of their programs, activities and
projects;

(@) Take appropriate measures to ensure that cash disbursements and contractual
commitments do not exceed the amounts appropriated in their respective budgets;

() Ensure that their respective agencies settles all contractual commitments or approves
payment thereon within the time prescribed by law,

(@) Insitute eftectve and efficient management systems, procedure and practices for assets,
liabilities, and personnel, including intemal controls, risk management, and performance
review,

(h) Demonstrate that due regard has been taken on the recommendations provided in intemal
and extemal audit evaluation reports, to the extent authorized in their respective budgets;

(i) Provide credible cash forecast for timely and accurate cash programming; and
() Provide accounting and reporting of public finances through the integrated financial
management information system and/or other preparatory online information systems as
required in this Act.
Section 13. Capacity Development Requirements on Public Financial Management. — The
foregoing agencies shall continue to formulate capacity development requirements on PFM and

conduct trainings on the same. In this regard, the OCG shall oversee the formulation of the said
capacity development requirements to ensure alignment of the objectives.

PART Ill
FISCAL RESPONSIBILITY

Section 14. Fiscal Responsibility Principles. — The State shall pursue its policy objectives in
accordance with the following Fiscal Responsibility Principles:

(@) Implement fiscal policies and strategies consistent with the achievement of
macroeconomic stability and inclusive economic development;

(b) Manage resources in a fiscally and environmentally sustainable way;
(©) Maintain prudent levels of public debt;
(d) Maintain an appropriate balance between government revenues and expenditures; and
(e) Manage fiscal risks in a prudent manner,
Section 15, Statement of Fiscal Policy. — The DBM, in coordination with DOF, NEDA and OP in
the DBCC, shall prepare, subject to the approval of the President, the Statement of Fiscal Policy

which shall contain measurable medium-term macroeconomic and fiscal objectives and forecasts
consistent with the Fiscal Responsibility Principles and the Long-Term Vision Report.

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‘The President shall submit for information of Congress, the Statement of Fiscal Policy not later
than ninety (90) days upon commencement of his/her term of office and update the measurable
fiscal objectives set forth therein three (3) years thereafter.

Section 16. Medium-term Fiscal Strategy— The DBM, in coordination with the DOF, NEDA, and
OP in the DBCC, shall prepare, subject to approval of the President, a Medium-term Fiscal
Strategy and its annual updates. The Strategy and its updates shall be consistent with the
approved Statement of Fiscal Policy and Long-Term Vision Report. It shall include a summary of
the fiscal policies for revenue, debt, deficit, expenditure, and fiscal risk management, supported
by a medium-term fiscal sustainability anaiysis, consistent with the measurable fiscal objectives
established in the approved Statement of Fiscal Policy. The IRR of this Act shall detail the other
specifications for the Medium-term Fiscal Strategy and its updates.

‘The President shall submit for the information of Congress, the Medium-term Fiscal Strategy
for the following fiscal year not later than March 15 of the current year and shall publish the said
report on a goverment website not iater than seven (7) days after it is submitted to Congress.

Section 17. Fiscal Reports. — The DBM, in coordination with the DOF, NEDA, and OP in the
DBCC, shall produce a Mid-year Fiscal Report (MFR), covering the first half of the current fiscal
year and an Annual Fiscal Report (AFR) on the govemment’s macroeconomic and fiscal
performance covering the preceding fiscal year.

‘The MFR and AFR shall include information on macroeconomic and fiscal outtums for the
period covered as compared against forecasts and objectives stated in the Medium-term Fiscal
Sh as well as reporting on budget execution, at least in the aggregate and by agency level,

red against approved appropriations and other spending authorities. The IRR of this Act
Shall detal the other specifications forthe contents ofthe MFR. and AFR

‘The President shall submit the MFR to Congress not later than September 30 of each year
while the AFR shall be submitted together with the Proposed National Budget. Said reports shall
be published on a goverment website not later than seven (7) days after they are submitted to
Congress.

Section 18. Long-term Vision Report. - The NEDA, in coordination with the DOF, DBM and
OP in the DBC, shall submit a Long-term Vision Report to the President and Cabinet, and
Congress not later than October 31 and November 30, respectively. Said Report shall assess
the long-term sustainability of existing government policies over the next twenty-five (25) years,
taking into account demographic, environmental, and other changes.

‘The first Long-term Vision Report shall be submitted to the President and Cabinet, and
Congress within two (2) years from the effectivity of this Act, to be updated every six (6) years
thereafter.

The NEDA shall cause the publication of the Long-term Vision Report on a goverment
website not later than seven (7) days upon submission to Congress.

Section 19. Deviations from Fiscal Objectives. — The government may deviate from the
medium-term fiscal objectives in the approved Statement of Fiscal Policy on a temporary basis,
where such deviation is due to a major natural disaster, unanticipated severe economic shock, or
other significant unforeseeable event that cannot be accommodated through accessing the
Contingent Fund and/or the National Disaster Risk Reduction and Management Fund, as may be
applicable or prudent fiscal policy adjustments, or the use of other flexibilities provided in this Act.

The President shall submit a report to the Congress, stating the reasons for any such
deviations, the plans and the expected time to address such deviations, as part of the succeeding
Medium-term Fiscal Strategy or its annual update, or in the Mid-year or Annual Fiscal Report,
whichever is the next report due and within the prescribed period under this Act.

‘Section 20. Shared Fiscal Discipline. — All proposed revenue: eroding and expenditure bills shall

implementation
and the next five (5) years. Expenditure bills refer to those which will result in a reduction of

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revenue collections or an increase in national goverment expenditures, including those
mandating the creation of recurring expenditures.

Each House of Congress shall provide guidelines prescribing the form, content of
the Financial and Budgetary Information Sheet, as well as the appropriate offices from which such
information shall be acquired, and the implications of non-compliance with said submission,

PART IV
BUDGET PREPARATION, EXECUTION, AND ADJUSTMENT

Section 21. Governing Principles in Budget Preparation. ~ There is hereby established a set
‘of goveming principles to be observed by the NGAs, GOCCs, and LGUs in the preparation of
their annual budget proposals, and by the DBM in the preparation, and the presentation to
Congress, of the Proposed National Budget:

(a)/Ceshitieoed | essieios stil bn ‘adopub th in, prsgosed gereral aed spacial
‘appropriations bills to promote faster and more effective delivery

Siliguri gad Ressbnll ee plhplerhei Ny dlingi or btolpal bay
included, identifying those requiring approval by Congress and those authorized under
ching loan

(c) All sources of funds and authorized uses available to the agency shall be considered in
the evaluation of agency proposals and determination of agency budget levels, and shall
likewise be disclosed in the Proposed National Budget and reports;

(d) Evaluation of agency proposals may include the analysis of a development plan, master

or released, and such other criteria as may be determined by the DBM. The performance
shall be evaluated based on the actual disbursements and contractual commitments as
compared to the appropriations;

(e) All appropriations shall be valid for one fiscal year i.e., from the effectivity of the
appropriations act until the end of the fiscal year concemed with no provision for carryover,
except for a three month Extended Payment Period in the following fiscal year to allow
agencies to settle payments for goods and services delivered during the previous fiscal
year,

(f) Items of appropriations shall be presented in such a way as to identify both the entity
responsible for the expenditure and the intended results from the use of the appropriation
in order to evaluate the performance of the agency;

(9) Both the financial and non-financial performance of agencies shall be presented in the
Iau ELicour ts gw Garare Ancvonvianers Ack eteire pereomne
informed budget; and

(h) Items of appropriations shall be reflected by department, agencies, bureaus, and offices,
and shall be presented for information purposes, by region and province, and eventually,
bby city or municipality.

Section 22. Planning-Budgeting Linkage. — Development strategies identified in the Philippine
Development Pian (PDP) shall be a primary consideration in the formulation of the budget
considered in the formulation of the annual agency budgets that conform to the annual budget
ceilings approved by the President.

‘The implementation of programs and projects funded under the annual agency budgets shail

be monitored to ensure economy, efficiency, and effectiveness in the use of public funds.
Monitoring and evaluation of these projects shall cover, among others, the planned and actual

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performance of agencies, citing reasons for deviation and/or poor absorptive capacities. The
results of the project evaluation shall inform the assessment of subsequent plans and budget
proposals of agencies.

‘Section 23. Budget Priorities Framework. — The DBM, in coordination with the DOF, NEDA and
OP in the DBCC, shail present to the President and Cabinet, on or before April of each year, a

govemment spending
fiscal space; and other requirements laid down in the IRR

Section 24. The Budget Preparation Process. - The DBM shall determine the budget
preparation process and calendar. The budget preparation process shall cover: (i) NGAs; (ii)
GOCCs with respect to their impact on revenues, expenditures, assets, and liabilities and risks of
the govemment; and (ii) LGUs as to their impact on revenues and expenditures of the
government.

‘Section 25. The Proposed National Budget. — The President shall submit to Congress, not later
Bey ny a) re ce Om BO ny Oo ney ot ovary Yon the Proposed National Budget,
which shall be the basis of the General Appropriations Bill.

‘The President shall determine the form and content of the Proposed National Budget which
shall include, but not limited, to the following:

(a) President's Budget Message -provides a preview of the Proposed National Budget,
explaining the principles, objectives and policy framework adopted and the spending
priorities for the fiscal year,

(b) Budget of Expenditures and Sources of Financing (BESF) —contains the macroeconomic
parameters; dimensions of three-year (3-year) expenditure program, revenues, financing,
and outstanding debt; overview of the financial positions of GOCCs, LGUs, and public-
private partnership projects, as well as the other items listed in the IRR;

(c) National Expenditure Program (NEP) — includes the strategic objectives, details of the

three-year (3-year) expenditure program, performance information, such as key
strategies, cutputs and cuicomes for agencies in relation 9 fhelr budgets, and staffing
summary;

(d) Fiscal Risk Statement — presents a consolidated statement of the fiscal risks that the
national government faces, including those from the contingent liabilities of Government
Agencies and other items listed in the IRR.

As required under Section 17 of this Act, the President shail likewise submit for consideration

of Congress, the Annual Fiscal Report for the preceding fiscal year not later than the
abovementioned date, and the Mid-year Fiscal Report for the current year not later than

September 30 of every year.

Congress may not increase the appropriations recommended by the President for the
‘operations of goverment as specified in the Proposed National Budget.

The President shall publish the Proposed National Budget on a Government website on the
same day as it is presented to Congress.

Section 26. Program Classification. — The Proposed National Budget shall adopt a structure

and feedback for planning and prioritization of expenditures.

10]


Section 27. Lump Sum Appropriations. — To promote the transparent and detailed disclosure
of all proposed government spending, lump sum appropriations and special purpose funds (SPFs)
in the Proposed National Budget shall be limited to: (1) the National Disaster Risk Reduction and
Management Fund (NDRRMF); (2) the Contingent Fund; (3) Statutory Shares of LGUs; and (4)
other SPF not falling under any of the preceding purposes and the details of which could not be
determined during the budget preparation stage.

Section 28. National Disaster Risk Reduction and Management Fund. — The NDRRMF shall
be used for: (1) disaster risk reduction or mitigation, prevention and preparedness activities, such

human induced calamities which may occur during the budget year or those that occurred in the
preceding two (2) years.

‘The NDRRMF may include the Quick Response Fund (QRF) of agencies, which shall be used
as a standby fund in order that the situation and living conditions of people in communities or
areas stricken by calamities, epidemics, crises, and catastrophes may be normalized as quickly
as possible. The QRF shall be released directly to the agencies concemed upon approval of the
DBM.

Releases from the NDRRMF, other than the QRF, shall be subject to the prior approval of the
President, who may take into consideration the recommendation of the National Disaster Risk
Management

Section 29. Contingent Fund. - The Contingent Fund shall cover the funding requirements of
ew and/or urgent projects and activities of national government agencies and GOCCs that need
to be implemented or paid during the year, such as, legal obligation of the government arising
from final and executory decisions by competent authority, including arbitration awards, mediation
settlement, or compromise agreements, requirements of newly created offices, or deficiencies in
the appropriations for local and extemal travels of the President of the Philippines.

Releases from the Contingent Fund shall be subject to approval by the President of the
Philippines, other than payment resulting from final and executory decisions promulgated by
competent authorities, which shall be subject to approval by the DBM

‘The DBM shail inform Congress of all releases from the Contingent Fund in the quarterly and
annual fiscal reports including information on the date of release, the amount covered,
corresponding purpose/s and recipient agency.

Section 30. Statutory Shares of Local Government Units. — The shares of LGUs in the
proceeds from national taxes and other transfers to LGUs authorized by law shall be released to
the LGUs in accordance with the provisions on the use, allocation, and release of the funds as
may be provided in pertinent laws, rules and regulations.

Section 31. Unprogrammed. — Congress may authorize standby
to cover the funding requirements of other priority projects and activities or as well
‘as provide appropriations cover for foreign-assisted projects (FAPs) not specifically included in
the of the Appropriations Law. ‘shall
have the same level of details as in the programmed component of the Law. The

of the total proposed expenditure in the programmed component of the Appropriations Law.

The Unprogrammed Appropriations shall take effect only when supported by excess
collections generated in any one of the particular tax or non-tax revenue source from its
corresponding revenue collections target in the BESF as certified by the BTr, or when there are
new loan agreements for FAPs. In no case shail the Unprogrammed Appropriations be activated
or released when there is a risk of breaching the measurable fiscal objectives for the budget
balance (including a deficit) or debt for the financial year or future years as provided in the
Statement of Fiscal Policy and Medium-term Fiscal Strategy or if there is a risk of breaching any
of the Fiscal Responsibility Principles.

11]


Releases from the Unprogrammed Appropriations shail be subject to the prior approval of the
President of the Philippines, other than final and executory decisions, which shall be subject to
approval of the DBM.

The DBM shall inform Congress of all releases from the Unprogrammed Appropriations in
the quarterly and annual reports including information on the date of release, the amount covered,
corresponding purpose/s and recipient agency.

Section 32. Budget with Account Codes. — ere ror Le eomenn

‘accounting, auditing and reporting of all the financial transactions of the government.

Section 33. Re-enacted Budget. — if, by the end of any fiscal year, Congress shall have failed
to enact the General Appropriations Bill for the ensuing fiscal year, the General Appropriations
Law for the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect
until the said General Appropriations Bill is passed by the Congress.

Consistent with the Fiscal Responsibility Principles, the Re-enacted Budget shail be enforced
as follows:

(a) The aggregate level of the Re-enacted Budget shallbe jimited to the total amount
appropriated in the preceding year's Appropriations Law, but shall in no case exceed the
level of the sources of financing under the BESF of the Proposed National Budget;

(b) The appropriations for the following shall be limited to the amount authorized under the Re-
Budget, but in no case exceed the amount proposed by the President in
Sha Prepcoed Nodal gat

. Ongoing programs, projects and activities;
. Personnel benefits, including retirement gratuities, Pensions, terminal leave pays

1
2
and related expenses,
3. NDRRMF, Contingent Fund, Statutory Shares of LGUs, and other SPFs; and
4. Budgetary support to GOCCs for their operational requirements.

(C) Inno case shall the following be considered part of the Re-enacted Budget:
1. Completed programs, osram ee tace. ad acmlans wed He: Gacera feeroniinton
Law for the preceding fiscal

2. Budgetary support for GOCCs for support to programs, activiies or projects; and
3. Equity contribution of the National Govemment to GOCCs.

The items and/or amount of appropriations not covered under the Re-enacted Budget as
Provided above shail not be released, disbursed, or utilized for the purpose previously authorized.

is DEM aia ali izoes on fs sxpeowte sre somny eens ol Spier ieate
authorized under the Re-enacted Budget in accordance with the foregoing, supporting
requirements to determine actual needs, ‘and other pertinent rules in the implementation of the
Re-enacted Budget.

Upon enactment of the General Appropriations Law anytime during the current fiscal year, all

pcr i ptyee replenish edgar galled Smechll pig weny

implemented pursuant to, and charged against, for account recording purposes, the General
Appropriations Law for the current fiscal year.

12]


Section 34. Special Appropriations Bill. — A Special Appropriations Bill is a proposal submitted

appropriations
laws. It shall specify the purpose/s for which it is intended and be valid until the end of the fiscal
year of its enactment.

‘A Special Appropriations Bill shall be supported by funds actually available or those which are

and (2) unforeseen requirements of the government

‘A Special Appropriations Bill may likewise refer to a proposal submitted by the President, as
recommended by the DBM, before Congress for additional appropriations for existing or new
programs, activities or projects of an NGA or GOCC with fast in-year disbursement rate. In this
ase, the bil may be supported by the current fiscal year's sources of fancing as certfed bythe
National Treasurer due to reversion of funds of NGAs or GOCCs resulting from

releases of Public Funds covered by an Appropriations Law as soon as such Law comes into
efficient di ;

appropnations,
agencies to contract out and disburse funds, except for instances provided in the IRR.

Section 36. Availability of Cash-Based Appropriations. — All appropnations shail be available
for release, contractual commitment and disbursement until the end of the fiscal year. However,
Govemment may still disburse funds not later than the three (3) months Extended

authorized appropriations of the said preceding fiscal year.

Section 37. Multi-year Contracts. — The DBM shall identify the requirements and/or prescribe
guidelines before agencies may enter into multi-year contracts such as the issuance of a Multi
year Contractual Authority (MYCA)

In the case of GOCCs, they shall secure prior authority from their respective governing boards
before entering into multi-year contracts

For solicited multi-year Public-Private Partnership projects approved under Republic Act
(R.A.) No. 6957, anid Dy RA No. 7718, the National Government responsibility shall be
covered by a letter of commitment issued in accordance with the guidelines issued by the DBM.

In all instances, Laas cmetereriy lies naan entre och ed allo
‘exceed the cash appropriations for the purpose during the year. Procurement of
Projects shall be subject to the provisions of R.A. No. 0104 and fis IRR and the guidelines issued
by the Goverment Procurement Policy Board (GPPB).
Section 38. Early Procurement Activities. — To ensure full budget utilization, timely contract

Procurement activities from pre-procurement
their proposed budget in the NEP, COBs or Appropriations Ordinance, in accordance with the
guidelines issued by the GPPB.

13]


For multiyear projects, the issuance of a MYCA by the DBM is required prior to
commencement of any procurement activity. All existing Multi-Year Obligational Authority shall be
understood to refer to MYCA.

Agencies may only proceed with the awarding of contract upon approval or enactment of their
respective appropriations or budget authorization document, as the case may be, and based on
the amount authorized therein.

Section 39. impoundment of Appropriations. - The President of the Philippines, upon
recommendation of the DBM may propose the rescission of appropriations from both houses of
Congress, under any of the following:

(a) If the appropriations are no longer required to fulfil the objectives originally sought to be
achieved by the programs, activities and projects covering the same; or

(b) In case of an unmanageable National Govemment budget deficit.

Unmanageable National Government budget deficit as used in this section shall be construed
to mean that: ()) the actual National Government budget deficit has exceeded the quarterly budget
deficit targets consistent with the full-year target deficit as indicated in the BESF submitted by the
President to Congress pursuant to Section 22, Article VII of the Constitution; or (i) there are clear
‘economic indications of an impending occurrence of such condition, as determined by the DBCC
and approved by the President.

Both Houses of Congress shail act on the proposed rescission within forty-five (45) days after
the receipt of the impoundment proposal from the President by issuing a joint Impoundment
Resolution. Within the same period of forty-five (45) calendar days, the appropriations covered
by the impoundment Proposal shall not, in any way, be rescinded in relation to the purposes and
objectives for which it was appropriated. Congressional inaction after the 45-day period, is
equivalent to an approval of the impoundment proposal.

Impounded funds shail revert to the National Treasury and shall not thereafter be available for
expenditure except by subsequent legislative enactment.

Section 40, Authority to Declare and Use Savings. — The President of the Philippines, the
President of the Senate of the Philippines, the Speaker of the House of Representatives, the Chief
Justice of the Supreme Court, the Ombudsman, the Heads of the Civil Service Commission, the
‘Commission on Elections, and the COA are hereby authorized to declare and use savings in their
respective appropriations to augment actual deficiencies incurred for the current year in any item
of their respective appropriations. An item of appropriation shall pertain to the amount
appropriated for a program, activity or project in the Appropriations Law. In the case of programs
with several activities and/or projects, each activity and/or project shall be considered an item of

appropriation.

The foregoing constitutional officers authorized to use savings shall be responsible for
ensuring that a semestral and annual report on their respective use of savings shall be submitted
to the President of the Senate of the Philippines and the Speaker of the House of the
Representatives, copy furnished the DBM. The report shall indicate among others, the amount of
savings generated, the sources and grounds used therefor, and the existing program, activity or
project in their respective appropriations augmented. They shall likewise ensure that said reports
are posted on their respective websites.

The DBM shall determine the procedure, as well as the supporting documents needed in the
declaration and use of savings authorized in this Act.

Section 41. Meaning of Savings. - Savings refer to portions or balances of any released
‘appropriations in this Act which have not been obligated as a result of any of the following:

(a) Completion, final discontinuance, or abandonment of a program, activity or project for
which the appropriation is authorized; or

14|


(b) Implementation of measures resulting in improved systems and efficiencies and thus
enabled an agency to meet and deliver the required or planned targets, programs and
services approved in this Act at a lesser cost.

In case final discontinuance or abandonment is used as basis in the declaration of savings,
such discontinued or abandoned program, activity or project shall no longer be proposed for
funding in the next two (2) fiscal years,

Allotments that were not obligated due to the fault of the agency concemed shall not be
considered savings.

Section 42. Rules on Augmentation. — Augmentation is the act of the constitutional officers
authorized to use savings in their respective appropriations to cover a deficiency in any existing
program, activity or project within their respective offices. A deficiency in a program, activity or
project may result from:

(a) Unforeseen modifications or adjustments in the program, activity or project; or
(b) Re-assessment in the use, prioritization and/or distribution of resources.

The particulars of the expenditures to be funded from savings should be within the scope of,

or covered by an existing program, activity or project. The existence of a program, activity or

project regardless of the availability of allotment class/es is sufficient for the purpose of
piri ns

In no case shall a non-existent program, activity or project be funded by augmentation from
‘savings or by the use of an appropriations otherwise in this Act

Section 43. Rules on Modification in the Allotment. — Modification in the allotment is the limited
flexibility given to NGAs to modify or change the allotment within an existing program, activity or
project which shall not entail any augmentation of the amount appropriated for the said program,
activity or project during budget execution. in the case of programs with several activities and/or
projects, modification may only be undertaken within each activity and/or project.

Modification in the allotment may be undertaken in any of the cases specified in the rules and
regulations issued by the DBM to ensure the uniform implementation among the various branches
of government, the proper recording of modifications, and the timely submission of reports by all
the offices concemed.

PART V
FINANCIAL MANAGEMENT

Section 44. General Fund. — All monies received by NGAs, whether coming from taxes, fees,
charges, penalties, income, dividends, interest eamings, loan proceeds, grants, donations, asset
sale proceeds and such other receivables, shall accrue to the General Fund and be remitted to
the National Treasury, unless otherwise provided by law or stipulated by covering loan or grant
‘agreements. Monies under the General Fund shall be made available to support the requirements
of the National Government authorized in an Appropriations Law.

A Special Account in the General Fund (SAGF) shall be established by law only under
exceptional circumstances to record taxes, fees, charges, penalties, income, dividend, interest
eamings, grants, and donations collected, earned or received by NGAs for specified purposes.
All laws authorizing the establishment of SAGFs shall specify the period of use thereof which shall
not exceed three (3) years, or if no period is specified, shail be deemed to be until the fulfilment
of the purpose for which the SAGF was authorized or for three years, whichever comes earlier.
All interests eamed by SAGFs shail accrue to the General Fund. The balance of SAGFs upon
their termination shall form part of the General Fund.

All earmarked revenues with significant inflows, a large portion of which are not or not
expected to be programmed for disbursement during the year shall be treated as Trust Funds and
recorded as trust receipts. Proceeds from these Trust Funds shall be recorded only as revenue
inflow in the General Fund when programmed to be spent for the year.

15]


The Permanent Committee created under Executive Order No. 292, s. 1987 shall recommend
for approval of the President the change in the treatment of existing SAGFs that shall be converted
into Trust Funds by virtue of the foregoing. The recording of revenue inflows from these SAGFs
‘shall be governed by the guidelines to be issued by the Permanent Committee.

Section 45. Special Funds. - in exceptional cases when a SAGF is not suitable for the
operations of a fund, Special Funds shail be authorized by law and limited to the following:

(a) Trust Fund — constituted from identified revenue sources and other receipts by NGAs or
Public officials acting as trustees, agents, or administrators for the fulfillment of
‘commitments or accomplishment of specified purposes. Trust Funds shall be deposited in
the TSA;

(b) Revolving Fund — constituted from receipts derived from business-type activities of NGAS
to be used for the operating requirements of said business-type activities and as such are
considered self-liquidating. Revolving Funds shall be deposited in the TSA or in an
Authorized Govemment Depository Bank (AGDB) upon authority of the National
Treasurer; and

(c) Retained Fund — constituted from taxes, fees, charges, penalties, income, dividends, or
interest eamings collected, eared or received by NGAS which are expressly authorized
by law to be retained by NGAs and utilized for specified purposes. Retained Funds shall
be deposited in the TSA or in an AGDB upon authority of the National Treasurer.

Notwithstanding the provisions of laws to the contrary, Special Funds may only be established
after evaluation by the Permanent Committee, as to their proper category and compliance with
the foregoing conditions. Any interest eamed by Special Funds shall accrue to said Funds.

Section 46. Review by the Permanent Committee. — The Permanent Committee shall review
all existing SAGFs and Special Funds to validate their compliance with the foregoing
requirements. Upon evaluation, the Permanent Committee shall recommend for approval of the
President the modification and/or termination of said funds as may be necessary.

It shall likewise review all SAGF's created upon the passage of this Act and may recommend
to extend their validity period, but in no case shall the extension exceed three (3) years at any
‘one time, subject to approval of the President.

The Permanent Committee shalll jointly issue guidelines for the establishment, review and
‘evaluation, accounting and reporting, and termination of SAGFs and Special Funds.

Section 47. Escrow Fund. — Escrow Funds are constituted from funds for which the
government's legal right to use is contingent upon a future event which may or may not occur.
Escrow Funds shall be deposited in the TSA or an AGDB upon authority of the National Treasurer,
and shall subsequently be part of the General Fund upon the occurrence of the future contingent
‘event. Any interest eamed by an Escrow Fund shall accrue to the said Fund. The amounts under
escrow, including interest eamed shall form part of the General Fund upon the occurrence of the
future contingent event.

Section 48. Waiver, Abatement, Refund and Compromise Agreements. — No public official
shall waive, abate, refund, or enter into a compromise agreement on a tax liability or the payment
of fees or charges except in accordance with law. All waivers, abatements, refunds or compromise

made by an NGA shail be properly accounted for and reported. Refund of taxes and
other revenues shall be treated as a reduction in revenue collections.

Section 49, Grants. — NGAs may accept, with prior coordination with DOF, grants, in cash or in
kind, from domestic or foreign sources, for purposes relevant to their functions. In the case of
grants, in cash or in kind, from govemments of foreign countries, their agencies and
instrumentalities and intemational or multilateral institutions or organizations, acceptance
thereof shall be subject to the prior clearance and approval by the President or his authorized
representative based on the recommendation of the Secretary of Finance.

16|


The provisions of this Section shall not apply to: (1) any grant received by LGUs or GOCCs,
except where the grant is received by them on behalf of the NG; or (2) any grant authorized or
covered in accordance with existing law.

Grants received in kind shail be valued and registered in the proper registry of the National
Goverment.

Section 50. Treasury Single Account. - The TSA refers to the banking arrangement managed
by the BTr wherein the government transacts all monies collected, received or paid by NGAs in
‘one bank account or a set of linked bank accounts and gets a consolidated view of its cash
position on at least, a daily basis.

The TSA shall cover remittances, releases or disbursements from the General Fund, SAGFs,
‘Special Funds, and any other fund managed by the BTr, except in any of the following instances:

(a) When monies under the General Fund are placed under investments;

(b) When the BTr is required to hold foreign currency accounts; or

(c) When authorized by the Secretary of Finance.

The BTr, in coordination with NGAs authorized by law to undertake revenue collection and
administration, shall make the necessary arrangements with authorized agent banks (AABs) to
facilitate the collection and transfer of said revenues to the TSA. AABs shall deposit said
collections to TSA within the period and in the manner prescribed by laws, rules and regulations.
Section 51.Oversight on Government Bank Accounts. —Notwithstanding any provision of law
to the contrary, the BTr shall undertake any of the following in case of violation of a provision in
this Act and guidelines issued on the implementation of the TSA:

(a) Transfer balances of NGA bank accounts to the TSA;

(b) Close any NGA bank account; and/or

(c) Revoke the authority to open any NGA bank account

The NGA or GOCC which has opened a bank account, as well as the bank concemed shall
promptly disclose information regarding such account to the BTr.

Section 52. Treasury Cash Management. - The BTr shail issue orders for the conduct of cash

management including the requirement to provide projections on the timing of future transactions
of NGAs taking into consideration that the appropriations law is considered the authority of the
agencies to contract out and disburse funds, except for instances provided in the IRR.

Section 53. Investments. - The BTr may invest portions of the funds held in the TSA for such
Periods as the BTr may deem prudent considering cash management requirements and based
on terms and conditions as may be set by the IRR of this Act. Investments are authorized to be
made in any of the following:

La cord pelt cap sberlin ialalhlad
‘Secretary of Finance in consultation with the BSP;

(b) Sovereign-issued securities with an investment grade rating; or
© ther ted income scutes wit an AAA cred rating fesued by a least two (2) reputable
international credit rating agencies acceptable to the Secretary of
‘The BTr may appoint a fund manager as an agent of the National Goverment to undertake
the investment of the funds.

Interest eamed and other income from investments shall accrue to the General Fund, unless
otherwise provided by law.

17|


wCovaneene

Section 54. Management of National Government Borrowings. — Borrowings by the National
Goverment shall be for any of the following purposes:

Financing budget deficits and liquidity shortfalls;

Refinancing and pre-financing maturing debts;

‘Obtaining foreign currency on behalf of the BSP;

On-lending to an approved entity;

Financing all sums of money paid to fulfil guarantees;
monetary conditions should the

PNDNSONs

Defraying expenditures covered by appropriations.

Borrowing under this Act should adhere to the Fiscal Responsibility Principles and measurable
fiscal objectives in the Statement of Fiscal Policy.

Section 55. Borrowings by Government -Owned or -Controlied Corporations. - Before the
end of each fiscal year, the Head of a GOCC shall prepare a borrowing program for the following
fiscal year which shall support the COB and for the medium term, both of which shall include a
full financial plan with the details of the loans, refinancing and repayment that the GOCC intends
to take. Said borrowing program, including changes thereon, shall be subject to the approval of
the Head of the NGA overseeing the GOCC, and shall be submitted to DOF for information, and
‘shail be published in the concemed GOCC website.

GOCCs shall seek approval of DOF for their borrowing activities as defined in the IRR.

Nothing in this Section shall be construed as creating a govemment guarantee on any
borrowing, loans or refinancing and repayment that the GOCC intends to take.

Section 56. Local Government Borrowings. - An LGU may borrow funds from domestic and
foreign sources in accordance with the Local Goverment Code of 1991 or any other applicable
law. The financial plan including borrowing program shall be published in the appropriate
government website within seven (7) days after the borrowing program has been approved,

Section 57. Debt Reporting. — The DOF, through the BTr, shall ensure that the records include
information on the principal, terms of repayment, amounts drawn, interests and service charges
accrued, principal and interests paid, and the balance outstanding, and shall make the records
available in a timely way to the President, Congress and COA when requested and in accordance
with the reporting requirements in this Act.

Each LGU and GOCC shall maintain records and provide reports to the DOF on loans as
required by relevant laws, rules and regulations.

Section 58. Guarantees. - Guarantee, indemnity or security shall be provided to an NGA or a
GOCC as provided by law, and subject to the annual guarantee ceiling prescribed in the General
Appropriations Law, and upon such terms and conditions as the Secretary of Finance may
recommend consistent with relevant laws, rules and regulations. The overall level of guarantee,
indemnity of security shall adhere to the Fiscal Responsibility Principles laid down in this Act and
the fiscal objectives in the Statement of Fiscal Policy.

‘The DOF shall charge a risk-based fee for any guarantee, indemnity, security, relending or
similar financial accommodation it may extend toa GOCC.

In no case shall the National Government be liable for any borrowings by any agency of the
government except for explicit guarantees as provided by law.

Section 59. Limitation on the Liability of the National Government For Debts of Other
Entities. - The National Govemment shall not be liable for any implied guarantees asserted by
any person or entity, but only for explicit guarantees extended in accordance with existing laws,
and guarantees in favor of the Govemment Service Insurance System, Home Development
Mutual Fund, Philippine Health Insurance Corporation, and the Social Security System in their
respective charters.

18|


same Sas coe te a Gait don fe hatoral Goverment rom be eiiy terifioes beratt fe
payment on the guarantee, indemnity, or security was made.

Section 61. Information on Contingent Liabilities. - The DOF shall keep a complete and
updated registry of all contingent liabilities of the National Govemment, and provide the OCG with
a report on contingent liabilities as of the fiscal year.

Adequate intemal controls shall be ensured and an intemal audit function shall be maintained.

Section 63. 3. ketagrated Financia! Menagement information System. — There shell be an
integrated financial management information system, which shall be the single portal of all
financial transactions and reports to be used by NGAs, GOCCs and LGUs to integrate budgeting,
cash management, accounting and auditing processes.

Section 64. NGA Annual Plans and Proposed Budgets. — The Head of each NGA shall produce

forecasts assumptions highlighting
as required in the IRR, ‘as well as the Budget Call and other related orders from the DBM The
Annual Plan shail be submitted to DBM during the budget preparation process consistent with the
timetable and other guidelines in the Budget Call

The Annual Plan of a Department shall incorporate the Annual Pians of its attached NGAs and
GOCCs subject to guidelines prescribed in the IRR

‘Section 65. NGA Reporting Requirements. — For greater transparency and accountability, each
Head of an NGA shall:

(a) Submit monthly and quarterly reports on the agency's financial and non-financial
Performance to the DBM and OCG, not later than thirty (30) days after the end of every
month and quarter in the format specified by the DBM and shail publish the same on a
government website within the same regiementary period;

(b) Prepare an Annual Report which shail include year-end financial statements, reporting on
non-financial performance compared against the Annual Pian, and other information as
required in the IRR; submit the said Report to the DBM, OCG, and Congress no later than
six (6) months after the end of the fiscal year, and publish the said Report in a government
website no later than seven (7) days after its submission to Congress.

The monthly, quarterly, and annual reports of a Department shall incorporate the reports of its
attached NGAs and GOCCs subject to guidelines prescribed in the IRR.

Section 66. Service Agreements. - The Head of an NGA may enter into a service and/or
performance agreement with another agency for the latter to provide services charged against
the budget of said principal agency.

Section 67. Corporate Operating Budget. - The Board of Directors or Trustees of a GOCC shall
Prepare and submit a COB to the Head of the NGA overseeing said GOCC, the DBM, and the
DOF, not later than ninety (90) days prior to the commencement of the fiscal year, which shail
include, the objectives of the GOCCs and its subsidiaries, the activities to be undertaken,

19]


performance targets and risks; forecasts of financial statements for the next three (3) years; and
other information as may be required in the IRR.

The Head of the NGA overseeing said GOCC shall endorse the Board-approved COB to the
DBM, for the latter's approval. The Head of a GOCC shall publish the DBM-approved COB of the
GOCC on the official website of the Corporation not later than fourteen (14) days after the
approval of the COB,

Section 68. GOCC Reporting Requirements. — For greater transparency and accountability,
each Head of GOCCs shail

(@) Provide quarterly reports on financial and non-financial performance to the DOF, GCG and
the DBM, no later than thirty (30) days after the end of the quarter, in the format and time
specified by the DOF, GCG and DBM and shall publish it on their official website within
the same period; and

(b) Prepare an Annual Report, which shall include year-end financial statements, reporting on
non-financial performance compared against the COB, and other information as required
in the IRR; submit the same to the overseeing NGA, DBM, GCG, DOF and Congress no
later than six (6) months after the end of the fiscal year, and publish the said Report in a
government website no later than seven (7) days after its submission to Congress.

GOCCs with subsidiaries shall reflect in its quarterly and annual reports the aforementioned
required information for the whole corporate group, consistent with guidelines prescribed in the
IRR,

Section 69. Service Agreement for a GOCC. - Where GOCCs implement govemment non-
commercial programs, such as housing provision, irrigation and electrification, and receive
government funding, a service agreement with the NGA overseeing said GOCC shalll specify the
terms of delivery of goods or services that the GOCC must provide, and the funds that the
‘government will pay. Program funds shall be under the budget of the NGA overseeing said GOCC.

Section 70. Local Government Units. — The Local Chief Executives (LCEs) shall ensure that
adequate internal controls and an internal audit function are maintained.

The LCEs shall provide financial and non-financial performance information of their respective
LGUs to the OCG, DILG, and the BLGF under the DOF, subject to the guidelines to be issued
thereon,

Section 71. Application of Accounting and Auditing Requirements. — Any expenditure of
public money, including government assets or liabilities incurred by and for the Government
regardless of the source of funding, shall be subject to accounting and auditing rules and
regulations promulgated by the COA.

Section 72. Accounting Standards. - The OCG shall specify the basis, standards and
guidelines for appropriations reporting while the COA shall continue to set the basis, standards
and guidelines for financial accounting for use by the NGAs, GOCCs and LGUs.

The Heads of Agencies shall ensure that full, accurate and proper records are kept for their
respective agencies on financial matters and for performance in the production of goods and
services.

The DBM, OCG and COA shall ensure that complete, accurate and appropriate records of the
government are kept on both financial and non-financial performances.

20|


Section 73. Government Consolidated Reporting. — The OCG shall submit a quarterly report
showing performance against

Siar the evict each gamtar T?is enor! shellbe pubkehied iia goverment wobahe Wain soven

(7) days after the report is submitted to the President.

‘The OCG shail prepare the consolidated annual financial statements, not later than six (6)
months after the end of the fiscal year, for submission to the President, Congress and COA.

Section 74. Internal Audit Standards. — The OCG, in coordination with COA, shall specify the
standards for intemal audit in the NGAs, GOCCs, and LGUs.
PART Vil
‘TRANSPARENCY AND PARTICIPATION

Section 75. People’s Access to Public Financial information. — Before the start of each fiscal
year, the DBM shall promulgate a Calendar of Disclosures, and shall publish this on the
government website and such calendar shall contain the schedule of release of all budget
documents and information required by this Act and its IRR. The DBM shall monitor and
periodically report to Congress and the public on the compliance of agencies with the Calendar
of Disclosures and other fiscal transparency requirements under this Act and its IRR.

All documents and reports required to be published by this Act and its IRR shall automatically

goverment , and made
open data format, on a goverment website, ‘Subject to guidelines in the IRR.

Section 76. The People's Budget. — The DBM shall, for every fiscal year, publish citizen-friendly
‘summaries of the following, subject to guidelines and other specifications in the IRR:

(a) The Statement of Fiscal Policy in the year of the President's election and any updates
thereafter within thirty (30) days from submission to Congress;

(t) The Proposed Nationa Budget, to be published in electronic format within thirty (30) days
from submission to Congress of the Proposed National Budget:

(©) The General Appropriations Law, to be published in electronic format in a goverment
website within thirty (30) days from its effectivity; and

(d) The Annual Fiscal Report, to be published in electronic format in a government website
within thirty (30) days from submission to Congress;

Section 77. People’s Participation in the Budget Process. — — The government shail establish
participatory

pleas and other individual and organized stakeholders throughout the annual budget process.

To aid the empowerment of grassroots organizations and communities in the national budget

well as the strengthening of regional and local development councils’ roles in the national budget
process

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Policies and regulations for the establishment of participatory budgeting mechanisms

established by laws shall be formulated and enforced by:

(a) The DBM, together with other relevant agencies of the executive, when it comes to
participation in budget preparation, execution, and accountability;

(b) The House of Representatives and the Senate, through their relevant committees, when
it comes to participation in budget legislation; and

(c) The COA, when it comes to participation in the conduct of audit.

PART Vill
ENFORCEMENT

Section 78. Sanctions and Penalties. — Without prejudice to the provisions of other laws, the
following sanctions and liabilities in case of failure to comply with the reporting and posting
requirements under this Act, shall be imposed:

(a) The DBM shall not approve any request for release of allotments for items of

covered in the negative list or modification in the allotment nor recommend

the use of savings by the President until such time as the non-compliant agency has
submitted the report/s required under this Act,

(b) The COA may disallow any expenditure charged against augmentation using savings, and
‘any expenditure due to modification in the allotment, which were made within the period
succeeding the reporting period when the agency failed to comply with the reporting

requirements under this Act:

(©) Failure to report on the income and/or funds retained at the end of a reporting period shall
ender all disbursements against such income or funds in subsequent reporting periods
a8 void, and will render the responsible official liable under existing laws; and

(@) The Congress may motu proprio or upon the request of COA and/or DBM through its
appropriate oversight committee compel the head of the non-compliant agency, under
pain of contempt, to produce the required report/s and to explain reasons for failure to
submit and disclose said reports.

‘Without prejudice to the provisions of other laws:

(a) Every contractual commitment, expenditure or payment authorized or incurred in violation
of the provisions of this Act shall be void and shall render the public official and/or
employee authorizing or making such payment and every person in collusion with said
official or employee shalljinty and severally beheld abe to the goverment forthe fl
amount so paid or received. The public official or employee who knowingly incurs any
contractual commitment or authorizes any expenditure in violation of the provisions of this
fet or takes part therein shall Ikowise be removed or clemiseed from office, after due
notice and hearing, even if no criminal charge is instituted against him;

(0) Any pub fRcel or emoloyes: holding office or employment in a casual, temporary,
holdover, permanent or regular capacity, who shall cause the inclusion of fraudulent

information in any accountability report, shall be penalized with imprisonment not
‘exceeding five (5) years, or a fine not exceeding One Million Pesos (P1,000,000.00), or
both, Wao preiticn © Ceeacvanone Yen Tas be munis €y COX aaa eaten ee
related to such fraudulent information, provided, that this fine is reviewed and adjusted

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(©) A conviction under this Act shall carry with it civil liability, which may either consist of
restitution for the damage done or forfeiture in favor of the government of any unwarranted
benefit derived from the act or acts in question, or both, at the discretion of the courts, in
addition to possible administrative liability; and

(6) Private indvicuais who shu conspire with the ening Public Ofcals or Employees,

ether as co-principals, accomplices or accessories, in the commission of any violation

GTinveAct anal be subject othe same penaties as he Pubic Oftaals er Employees and
shall be tried jointly with them.

Section 79. Jurisdiction. — Actions under this Act shall be cognizable by the courts, tribunals,
bodies, agencies or authorities with appropriate jurisdiction under existing laws.

PART IX
FINAL PROVISIONS

Section 80. Implementing Rules and Regulations. — The DBM in consultation with the DOF,
BTr, NEDA and COA, and in coordination with agencies concemed, shall issue the IRR necessary
for the proper implementation of this Act, within ninety (90) days from the effectivity of this Act.
‘The IRR may be amended by the DBM, in coordination wit the agencies concemed, asthe need
arises.

Section 81. Transitory Provisions. — The DBM, DOF, BTr, NEDA and COA shall produce and
‘submit within thirty (30) days from promulgation of the IRR, a Transitory Pian for information, to
the Joint Congressional Oversight Committee on Public Expenditures to ensure the proper
implementation of the provisions of this Act, presenting the Sections that will not be implemented
(on the passing of this Act and those requiring compliance with certain conditions or the happening
of events before the provisions herein may be implemented.

Section 82. Repealing Clause.— Any law, presidential decree or issuance, executive order, letter
of instruction, administrative order, proclamation, charter, rule or regulation and/or parts thereof
contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or amended
accordingly.

Section 83.Separability Clause. — if for any reason, any section or provision of this Act is
declared unconstitutional or invalid, other sections or provisions which are not affected thereby
shall continue to be in full force and effect.

Section 84. Effectivity Clause. — This Act shall take effect fifteen (15) days following its
Publication in the Official Gazette or in two (2) newspapers of general circulation.

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