NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
SENATE
S. No. 2538
of tiU' fU
24 FEB -7 P12 ’43
RECEIVED BV;
Introduced by Senator Christopher Lawrence "Bong" T. Go
AN ACT
PROFESSIONALIZING THE GOVERNMENT ACCOUNTING SERVICE TO SERVE 
AS A TOOL FOR EFFECTIVE MANAGEMENT AND CONTROL OF GOVERNMENT 
RESOURCES, CREATING FOR THE PURPOSE THE GOVERNMENT 
ACCOUNTANCY OFFICE UNDER THE DEPARTMENT OF BUDGET AND 
MANAGEMENT AND FOR OTHER PURPOSES
EXPLANATORY NOTE
The 1987 Philippine Constitution mandates the keeping of government 
accounts, the promulgation of accounting rules, the audit of financial reports, and the 
submission of reports covering the financial operations and position of the 
government. By virtue of such mandate, government accountants hold an 
indispensable role in facilitating the seamless operation and transactions of the 
government. They play a crucial part in documenting expenditures, income, and 
collections, as well as in crafting financial statements or reports regularly submitted 
to Congress, the Commission on Audit, the Department of Budget and Management, 
the National Treasury, and other authorities concerned.
This proposed measure seeks to introduce reforms in the accounting service of 
the government to enable a more effective and responsive mechanism for the 
management of all government financial operations and transactions. This measure 
further provides for the creation of a Central Government Accounting Authority, herein 
referred to as the Government Accountancy Office (GAO), under the Department of 
Budget and Management which shall be solely responsible for the technical supervision


of accounting functions in all government agencies. By enacting this measure, the 
efficiency and effectiveness of financial and internal control system in the different 
levels of the bureaucracy will be streamlined and improved.
In view of the foregoing, the passage of this bill is most e^nestly sought.
SENATOR CHRISTOPHER LA
BONG" T. GO


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
)
)
SENATE
2536
of Hi? -fa V:
24 FEB-7 P12 *42
SNo.
RECEIVED BV;
Introduced By Senator Christopher Lawrence "Bong" T. Go
AN ACT
PROFESSIONALIZING THE GOVERNMENT ACCOUNTING SERVICE TO SERVE 
AS A TOOL FOR EFFECTIVE MANAGEMENT AND CONTROL OF GOVERNMENT 
RESOURCES, CREATING FOR THE PURPOSE THE GOVERNMENT 
ACCOUNTANCY OFFICE UNDER THE DEPARTMENT OF BUDGET AND 
MANAGEMENT AND FOR OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled:
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CHAPTER I
CENTRAL GOVERNMENT ACCOUNTING AUTHORITY
SECTION 1. Establishment of Central Government Accounting 
Authority. - There shall be created and established a Central Government Accounting 
Authority, herein referred to as the Government Accountancy Office (GAO), under the 
Department of Budget and Management (DBM) which shall be solely responsible for 
the technical supervision of accounting functions in all government agencies.
SEC. 2. Statement of Objectives. - The following are the specific objectives 
of the Government Accountancy Office:
(l)To initiate government accounting reforms needed in achieving effective 
control of funds in-flow and out-flow without necessarily constricting 
agency management thus allowing them to assume greater fiscal 
responsibility as provided by law;
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(2) To improve accounting efficiency and capability at the agency operating 
level; and
(3) To facilitate preparation and submission of accounting and other financial 
reports for budget accountability, management decisions, and external 
audit purposes.
SEC. 3. Head of the Government Accountancy Office; Deputies;
Quaiifications; and Saiary.
(1) The GAO shall be headed by an Accountant General whose rank shall be 
equivalent to a Department Undersecretary. He shall be assisted by two (2) 
deputies, whose ranks shall be equivalent to Department Assistant 
Secretaries.
(2) The Accountant General shall be appointed by the President for a term of 
seven (7) years. The Deputies shall be chosen by the President from among 
the Career Executive Services (CES) eligible. In no case shall any one of 
them be appointed or designated in a temporary or acting capacity.
(3) The Accountant General and each deputy shall receive an annual salary as 
may be provided by law.
SEC. 4. The Office of the Accountant Generai.
(1) The Office of the Accountant General shall determine policies, promulgate 
government accounting rules and regulations and prescribe accounting 
systems, procedures and techniques and standards governing the 
performance by the agency of its duties and functions.
(2) It shall also formulate measures on internal control to ensure accuracy, 
integrity and reliability of accounting records and reports.
SEC. 5. The Central Offices and Regionai Accounting Services. — The
GAO shall organize offices to handle the following areas of accounting:
(1) technical accounting services;


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(2) 
administration of chart of accounts and maintenance of budgetary 
control accounts;
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systems and training;
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national government accounting;
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local government accounting;
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government corporation accounting;
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financial management information; and
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decentralized accounting services.
These offices shall perform primarily staff functions, exercise technical 
supervision over the agency accounting services, and perform such other functions as 
may be assigned by the Accountant General.
CHAPTER II
JURISDICTION, POWERS AND LINKAGES
SEC. 6. Genera! Jurisdiction. - The following powers and duties shall be 
within the functional jurisdiction of the Government Accountancy Office, to wit:
(1) The design and prescription of accounting and financial reporting systems,
(2) The administration of the Government Chart of Accounts;
(3) The keeping of the central books of accounts of the Government; and
(4) The preparation of government-wide management accounting
SEC. 7. Keeping the Books of Appropriated Funds of the Nationai 
Government - The Department of Budget and Management through the 
Government Accountancy Office shall keep and maintain the central books of accounts 
of the appropriated funds of the National Government.


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SEC. 8. Examining Authority. - The GAO shall have the authority to examine 
the agency books of accounts for the purpose of ascertaining whether financial 
transactions are properly recorded and to determine compliance with budgetary and 
accounting rules and regulations.
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SEC. 9. Power to Exact Compiiance with Financial Reporting
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8 timely financial reporting requirements from all agencies of the Government.
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SEC. 10. Adjustment of Accounts between Agencies. - The GAO shall
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have the power, under such regulations as it may prescribe, to authorize and enforce
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the adjustment of accounts subsisting between various agencies of the Government.
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SEC. 11. Collection of Indebtedness due the Government - The GAO
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shall, through proper channels, assist in the collection and enforcement of all debts
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and claims, and the restitution of all funds or the replacement or payment at a
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reasonable price of property, found to be due the Government, or any of its agencies,
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in the settlement and adjustment of its accounts. If any legal proceeding is necessary
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to that end, the GAO shall refer the case to the Solicitor General, the Government
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Corporate Counsel, or the legal staff of the creditor government office or agency
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concerned to institute such legal proceeding. The GAO shall extend full support in the
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litigation. All such moneys due and payable shall bear interest at the legal rate from
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the date of written demand by the GAO.
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SEC. 12. Submission of the Annual Consolidated Financial Report. -
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The GAO, through the Secretary of the Department of Budget and Management, shall
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submit within four (4) months after the end of the fiscal year, to the President,
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Congress and the Commission on Audit, an audited annual consolidated financial
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report reflecting the results of government operations.
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CHAPTER III
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AGENCY ACCOUNTING FUNCTIONS
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SEC. 13. Organization and Functions. - There shall be created in every
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government agency an accounting group to be headed by an accountant
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administratively under the head of the agency or under the financial management
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service, but technically under the GAO who shall perform the following functions:
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(1) 
Maintain the agency books of accounts;
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(2) 
Analyze, record, classify and summarize all transactions involving the
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receipt and disposition of government funds and properties;
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(3) Prepare financial statements and interpret the results of financial
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operations for agency management decision-making purposes;
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(4) Prepare regular financial reports for the budgetary control purposes for
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guidance of agency management and for reporting to the DBM through the
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GAO;
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(5) Prepare and submit accounting reports required by the Commission on
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Audit; and
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(6) 
Certify to availability of funds.
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SEC. 14. Keeping of Accounts. —
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(1) The accounts of an agency shall be kept in such detail as is necessary
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to meet the needs of the agency and at the same time be adequate to provide the
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information needed by fiscal or control agencies of the Government;
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(2) The highest standards of honesty, objectivity and consistency shall be
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observed in the keeping of accounts to safeguard against erroneous, inaccurate or
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misleading information.
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SEC. 15. Recording ofFinanciai Transaction. - Each government agency
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shall record its financial transactions and operations conformably with generally
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accepted accounting principles and in accordance with pertinent laws and regulations,
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and by using the standard chart of accounts as prescribed by the GAO.
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SEC. 16. Financial and Physical Reports and Statements. -
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(1) The financial reports prepared by the agencies shall comply with the
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specific requirements of applicable laws and regulations as to nature, accounting
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basis, content, frequency, and distribution as well as with all applicable restrictions
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pertaining to information classified for national security purposes.
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(2) The financial statements shall be based on official accounting records
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kept in accordance with law and the generally accepted accounting principles and
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standards and should be signed by agency heads and the Chief accountants who must
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be Certified Public Accountants indicating his CPA certificate number.
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(3) The physical reports shall include the identification of the approved units
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or work measurements, work targets, work accomplished and manpower utilized for
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each budgeting function, program or project.
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SEC. 17. Submission of Reports. -
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(1) All heads of accounting units shall submit within two (2) months after
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the end of the fiscal year, to the GAO and the Commission on Audit, an annual financial
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report reflecting the results of the agency or program operations.
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(2) Whenever deemed necessary in the exigencies of the service, the GAO
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may, under regulations issued by it, require the agency heads, chief accountants,
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budget officers, cashiers, disbursing officers, administrative or personnel officers, and
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other responsible officials of the various agencies to submit trial balances, physical
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inventory reports, current plantilla of personnel, and such other reports as may be
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necessary for the exercise of its functions, including physical performance indicators
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report.
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(3) Failure on the part of the officials concerned to submit the required
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documents and reports at the time mentioned herein shall automatically cause the
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suspension of payment of their salaries until they shall have complied with the 
requirements of the GAO.
(4) Any other violation of the provisions of this Section shall likewise cause 
the suspension of payment of salaries, without prejudice to any other disciplinary 
action that may be instituted against such concerned official or employee.
CHAPTER IV
INTERNAL CONTROL SYSTEM
SEC. 18. Concept of Interna! Control - Internal control is the plan of 
organization and all the coordinate methods and measures adopted within an 
organization or agency to safeguard its assets, check the accuracy and reliability of 
its accounting data, promote administrative and operational efficiency and encourage 
adherence to prescribed managerial policies.
SEC. 19. Installation of Internal Control System. - The installation and 
implementation of a sound system of internal control shall be the direct responsibility 
of the agency head. For this purpose, such agency head shall ensure that all actions 
of the officials concerned are properly monitored and coordinated.
SEC. 20. Internal Control System. - Subject to the provisions of existing 
laws, rules and regulations and this Act, each agency shall set up internal control 
systems for the following areas:
(1) Cash receipt and disbursement;
(2) Property, supplies and other inventory items;
(3) Accounting and bookkeeping;
(4) Personnel recruitment, promotion and separation; and
(5) Procurement, purchases, storage, requisitions, issuance and disposal.


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SEC. 21. Organization. - There shall be created in every government agency 
an internal control unit which shall be responsible for assuring that steps are taken to 
safeguard the assets of the agency, checking the accuracy and reliability of the 
accounting data, promoting administrative and operational efficiency, encouraging 
adherence to prescribed managerial policies, and may conduct such other activities to 
achieve these ends.
For this purpose, the agency head may absorb as member/s of the staff of the 
internal control unit the resident COA personnel at the time of the effectivity of this 
Act.
SEC. 22. Functions. - The internal control unit shall have the following 
functions:
(1) Conduct spot cash audit of regular/special collecting disbursing officers 
of the agency.
(2) Pre-Audit agency transactions.
(3) Review contracts before awarding.
(4) Inspect properties delivered.
(5) Certify unserviceable and condemned equipment before replacement 
and disposal.
(6) Keep custody, and be responsible for the safekeeping and preservation 
of paid expense vouchers, journal vouchers, stubs of treasury warrant 
or checks, reports of collections and disbursements and similar 
documents together with their respective supporting papers.
Subsections 1 to 4 may be performed by the internal control unit on test basis 
or sampling method, in accordance with the implementing rules and regulations to be 
issued by GAO.
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SEC. 23. Reporting Responsibilities. - The head of the internal control unit
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shall submit reports directly to the head of the agency, copy furnished the DBM and
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the Commission on Audit, of his findings, observations and recommendations to
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maintain a sound financial management of the agency resources.
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SEC. 24. Liability of the Head of the Internal Control Unit. — All
management reports required by central fiscal agencies shall be certified correct by 
the head of the internal control unit and the agency head who shall be liable solidarily 
with each other for any malfeasance and misrepresentation which may later on be 
discovered by appropriate authorities.
SEC. 25. Implementing Rules and Regulations - As part of its functions, 
the GAO in coordination with the Commission on Audit shall develop and promulgate 
internal control standards and procedures to be adopted by all government agencies.
SEC. 26. Technical Supervision. - The Government Accountancy Office shall 
provide technical supervision and support in the development, installation and 
implementation of the agency internal control system.
SEC. 27. Management Audit - As the exigency of the service requires, the 
Department of Budget and Management shall conduct management audit of 
government agencies to check on management adherence to prescribed internal 
control standard and effect immediate remedial measures if existing internal control 
system is found weak and inadequate.
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FINAL PROVISIONS


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SEC. 28. Reorganization of the Department of Budget and
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Management- Within sixty (60) days after the approval of this Act, the Department
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of Budget and Management shall reorganized its functions and structure in accordance
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with the provisions herein.
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SEC. 29. Administrative Discipiinary Action. - Subject to such rules and 
regulations as may be formulated by GAO and approved by the President, any 
unjustified failure by the public officer concerned to comply with any requirement 
imposed in this Act shall constitute neglect of duty and shall be a ground for 
administrative disciplinary action against the said public officer who, upon being found 
guilty thereof after hearing, shall be meted out such penalty as is commensurate with 
the agree of his guilt in accordance with the Civil Service Law. Repeated unjustified 
failure to comply with the requirements imposed in this Act shall be conclusive proof 
that the public officer concerned is notoriously undesirable and corresponding 
penalties shall be imposed accordingly.
SEC. 30. Appropriation. - The necessary appropriations to implement the 
provisions of this Act consisting of the annual operating expenses of the Offices, 
including the salaries, allowances and other emoluments of all the its officials and 
employees shall be included in the annual General Appropriations Law. The usage of 
these funds shall be governed by the general appropriations and other budget laws.
SEC. 31. Impiementing RuiesandReguiations. - The GAO shall formulate 
and issue the necessary implementing rules and regulations, except as otherwise 
specifically provided in this Act.
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SEC. 32. Separability Clause. - Should any provision of this Act or any part
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thereof be declared invalid, the other provisions, so far as they are separable from
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the invalid one, shall remain in force and effect.
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SEC. 33. Repealing Clause. - All laws, executive orders, proclamations,
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decrees, instructions, rules and regulations, or part thereof, which are inconsistent or
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in conflict with any provision of this Act shall be deemed repealed or modified
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accordingly.
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SEC. 34. Effectivity Clause. - This Act shall take effect thirty (30) days after
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its complete publication in the Official Gazette or in two (2) newspapers of general
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circulation.
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Approved,
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