consultancy paper

8/3/2019 Consultancy Paper

1/30

A D A M S O N U N I V E R S I T Y

ACCOUNTANCY DEPARTMENT

BUDGET AND OPERATING PROCEDURES OF BARANGAY 66

ZONE 8 PASAY CITY, METRO MANILA

A Consultancy Paper

Presented to

The College of Business Administration

Adamson University

Manila

In Partial Fulfillment

of the Requirements for the Degree

BACHELOR OF SCINCE IN ACCOUNTANCY

Submitted by:

Caron, Joan Bernadette C.

Condol, Marcel Jan M.

Esguerra, John Mark F.

Noceda, Jennica Eloise F.

Rodulfa, Maricris R.

MARCH 2011


2/30



INTRODUCTION

B ara ng ay is the smalle st u nit of loc al go ve rnmen t in th e

Phil ippines. Each city or municipali ty contains numerous barangays and

each barangay is adminis tered by a Barangay Captain and a communi ty

counci l whose members are elected by the res idents of the barangay. I t

serves as the pr imary planning and implement ing unit of government

policies, plans, programs, projects , and activit ies in the community, and

as a forum where in col l ec t ive v iews of the people may be expressed ,

crystallized, and considered, and where disputes may be amicably settled.

(Sec 384) Barangays are composed of a Punong Barangay or Barangay

Captain, seven (7) Barangay Counci lors or Barangay Kagawad, a n d a

Y ou th C ou nc il o r Sangguniang Kabataan (SK) Chairman which is

considered as a member of the Council.

A barangay is given an annual budget by the national government.

As ide f rom being a f inancial p lan , the barangay budget serves as an

instrument for barangay officials to effectively manage the development

of the barangay. A wel l-prepared barangay budget serves as bas is for

p lanning and policy adaption , program and projec t implementa tion,

financial control and management information. A barangay budget consist

o f e st imat es o f i ncome and t ot al appropr ia ti ons cover ing cur rent

expendi tures and capi ta l outl ays. In implementing or executing the

barangay budget , barangay off icials shall ensure that the revenues as

es t imated are real ized, that the approved programs and projects in the

barangay development plan and in the annual budget are implemented,

that barangay funds are disbursed in accordance wi th the appropr iat ion

ordinance and reviewed annual budget, that al l f inancial transactions of

the barangay follow accounting and audit ing rules. Barangay records and

repor ts of budgetary t ransact ions must be prepared and kept to provide
http://en.wikipedia.org/wiki/Barangay_Kagawadhttp://en.wikipedia.org/wiki/Sangguniang_Kabataanhttp://en.wikipedia.org/wiki/Barangay_Kagawadhttp://en.wikipedia.org/wiki/Sangguniang_Kabataan


3/30



information on the status of project implementation and serve as basis for

the necessary correct ive act ion for ident i f ied deviat ions , to ensure that

obligations are incurred within the l imits of the approved appropriat ions,to r ecord unpaid obliga tions , both current and those cert if ied to as

accounts payable at the end of the year, to make transactions transparent

and the f inancial s tatus of the barangay a matter of public knowledge, to

serve as basic input into the next budget preparat ion . The barangay

officials must report to the general public the income actually realized for

the quarter, expenditures actually spent for the quarter and

accomplishments for the quarter.

In connection to this , a s tudy was conducted regarding the f low of

operat ions in a barangay. The barangay that we vis i ted to conduct our

study was Barangay 66 Zone 8 Pasay, City Metro Manila si tuated within

the hear t of Pasay Ci ty , whose boundar ies were Nor th Lakandula, Eas t

Dolores , West Tramo Lane South Arnaiz Avenue. The said communi ty

was headed by Barangay Captain Eduardo Balanova.

Residential , commercial and industr ial establishments are erected

within the area, having a total land area of 0.0281 square ki lometres .

Most of the people l iving in Zone 8 are employees and do have sari-sari

store as their major source of livelihood.

Like any organizat ion, ent i ty or local government uni t , funds are

indispensable to the barangay for payment of its operational expenses and

to successfully perform its powers, functions and duties vested upon by

law. The said barangay has a total al lot ted annual budget for 2011 of P2,

142,317.91 to be allocated to theirs programs and projects. Disbursements

of funds are made in compliance with the exist ing rules and regulations


4/30



and the Barangay Chairman is held primarily responsible for its execution

of and accountability.

This study of the operations of a barangay aims to provide a better

unders tanding to the communi ty of the sa id barangay regarding the

uti l ization of f inancial resources of their barangay. This study will also

give them awareness and eventually help their barangay in i ts functions

and operations.

In this study, the researchers gained knowledge of how a barangay,

the smal les t uni t of the local government , conduct i t s operat ions and

handle their financial resources efficiently for the whole year in a manner

that will benefit the whole community.

The future researchers can also make use of this study as a basis or

reference for further investigation and analysis of the subject or situation.


5/30



DESCRIPTION OF THE PROCESS

THE BUDGET CYCLE

The Punong Barangay, w ith the ass is tance of the

Barangay treasurer, prepares the barangay budget.

A Barangay budget consist of the following:

o Estimates of income; and,

o Total appropriations covering current operating

expenditures and capital outlays.


6/30



The Barangay Treasure is responsible for determining

the estimated income to be used as a source of fund in

the budget.

The Barangay Treasurer should submit to the Punong

Barangay on or before September 15 of each year the

detai led Statements of Income and Expenditures as a

basis for the preparat ion of the Budget for the next

fiscal year.

Flowchart of the Barangay Budget Process

Est imated sav ings at the end of the current year

forms paart of the Beginning balance for the budget

year.

It includes projected balances of any appropriation

which remain freeof any obligation or encumbrances

and which are still available at the end of the current

year a fter the satisfactory completion, or the

unavailable of the discontinuance or abandonment of

the work, activi ty or purpose for which the funds

where authorized.

The barangay annual budget must inc lude the

following:


7/30



o Appropriation for development projects of not

less than 20% of the total IRA of the barangay

for the budget year (Development Fund);

o Appropriation for Sangguniang Kabataan (SK)

programs, projects and activities equivalent to

10% of the general fund of the barangay for the

budget year (SK Fund);

o Appropr iations for unforeseen expendi tures

arising from the occurrence of calamities at 5%

of regular incomefor the budget year; and

o Provision for the del ivery of basic services

pursuant to Section !& of RA No.7160, and

effective local governance.

I. Disbursement By Check

a.All disbursement shall coverd with duly processed and

approved DVs/payroll;

b.The DVs/Payroll shall be prepared by the BRK;

c.The BT shall be responsible for paying claims againstthe barangay. All disbursements shall be in accordance

with existing rukes and regulations;


8/30



d.All claims shall be approved by the PB and certified as

to the validity, propriety and legality of the claim. In

case of claimchargeable against SangguniangKabataan Funds (SKF), The Chairman Sangguniang

Kabataan (SK) shall initial under the name of the PB;

e.Payment shall be drawn against the depository account

maintained with depository bank by the barangay.

f. The check shall be issued in the name of the payee as

indicated in the DV/payroll.

g.The chekh shall be signed by the BT and countersigned

by the PB;

h.A ll d isbursement by check shall be reported in the

summary of Checks Issued (SCKI); and

i. In case checks are waylaid, lost through theft or force

majeure, etc. the BT shall immediately notify and issue

a Stoppage of Payment notice to the banks; and

j . Stale check shall be replaced only when the original is

submitted to the BT for replacement.

II. Disbursement out of Cash Advance for Payroll


9/30



a. Cah payment shall be made out of the cah

advance given to the BT/AO;

b. The cash advance sha ll be used so le ly for payment

of salaries, honoraria, and other allowances due to the

barangay officials and employees;

c. The cash advance shall not be used for the

encashment of checks or for liquidation of previous cashadvance;

d. The cash advance shall be equal to the net

amount of the payroll corresponding to the pay period;

e . The cash sha ll be liqu iodated wi th in 5 days af te rthe end of the pay period.

f . Any uncla imed Honoraria/sa laries/allowances sha ll

be refunded to close the account;

g. All paid DVs/Payrolls shall be recorede in the

Summary of Cash Payments (SCP);

h. The SCP supported by paid DVs/Payroll shall be

accompl ished to support the l iquidation of the cash

advance for payrol l . In case the cash advance is more


10/30



than the disbursement, the excess shal l be refunded

and an OR shall be issued.

i. Succeeding cash advance shall be granted only

after full liquidation of the previous cash advance.

III. Disbursements out of Cash Advance for Travel and

Special Purpose/Time-bound Undertaking

a.For local/foreign travel, liquidation shall be done withina period of 30/60 days upon return to the personnels

workstation;

b. Cash advance for special purpose/time-bound

undertaking shall be liquidated upon accomplishment

of the purpose for which it was granted;

c . Excess cash advance shall be re funded and an OR

shall be issued by the BT;

d. The liquidation report with appropriate

supporting documents shall be submitted to the BRK,

who in turn sha ll submi t it to the C ity/Municipa l

Accountant for recording in the books on or before the

fifth day of the following month.

IV. Disbursement out of the Petty Cash Fund


11/30



a) The Petty Cash Fund (PCF) shall be maintained using

the Imprest system. The balance of the PCF shall not

closed at the end of the year.

b) The fund shall be kept separately f rom the regular

col lect ions and advances granted for a particular

purpose and shall not be used for payment of regular

expenses;

c)The amount of the PCF shall be determined by the SB

but not to exceed twenty percent (20%) of the fundsavailable and to the credit of the barangay treasury

d) All disbursements out of PCF shall be covered by duly

approved and accomplished Pet ty Cash Vouchers

supported by cash invoices, ORs or other evidence of

disbursements required undeper applicable accounting

and auditing rules and regulations;

e) All paid Petty Cash Vouchers (PCVs) shall be reported

in the summary of paid PCVs (SPPCV) to be certified by

the Petty Cash fund Custodian (PCFC).

f) The PCF shall be replenished as soon as disbursements

reach seventy five percent (75%) or as needed;

g) Replenishment of the PCF shall be made by submitting

a DV for the purpose supported by duly cert if ied

SPPCV, paid PCVs and supporting documents;

h) In case the PCFC resigns or ceased as custodian of the

Fund, ful l accounting/l iquidation of the Fund shall be


12/30



made. any remaining cash shall be refunded to close

the account; and

i) In no case shall the remaining cash of the former PCFC

be transferred to the incoming PCFC. For a complete

accounting, the account of the former PCFC shall be

c losed and a new account shall be opened for the

incoming PCFC.


13/30



Legend:

DV - Disbursement Voucher

P - PayrollI - Invoices

DTR - Daily Time Record

OSD - Other Supporting Documents

CCC - Carbon Copy of the Check

OR - Official Receipt

AP - Approved Payroll

CA - Certificate of Appearance

RIT - Revised Itenirary of Travel

I/T - Invoices/Tickets

SEP - Summary of Expenses Paid

LR - Liquidation ReportLB - Log Book

BT/AO- Barangay Treasurer/ Accountable Officer

SBR - Sanggunian Barangay Resolution

PCV - Petty Cash Fund

SPPVC- Summary of paid petty cash fund

Symbols:

- Flow of Documents

- Records

- file

- Document

- Check

- Process

- Book -


14/30



-


15/30



Area of

Responsibility/Person

Responsible

Sequence Activity

Barangay Treasurer

Punong Barangay

Barangay Treasurer

Payee/Supplier

1

2

3

4

5

6

7

8

Receives the approved

DV/Payroll.

Verifies completeness of

signatures on the DV/Payroll.

Prepares the check in thename of the payee for the

amount indicated in the

DV/Payroll.

Note 1. The check shall beprepared eith a carbon copy,

to be distributed as follows:

Original PayeeCarbon Copy at tached

to the DV/Payroll

Signs the check.

Forwards the check together

with the DV/Payroll andsupporting documents to thePB for countersignature on the

check.

Countersigns the check and

returns it to the BT together

with the supporting documents

for release.

Receives and releases the

check to the payee. Attachesthe carbon copy of the check

to the paid DV/Payroll.

Acknowledges the receipt of

payment by signing in Box D

of the DV, and retains 3 r d

copy for his file.


16/30



Barangay Treasurer

9

10

11

Issues an OR, if applicable, toacknowledge the payment

received.

Returned the signed DV to the

BT with the OR to the BT.

Note 2. The Or (if applicable)

shall be made as anadditional supporting

document to the

disbursements.

Attaches the OR issued by the payee/supplier to the original

DV together with the carbon

copy of the check. Retains the2nd copy of the Dv for file.


17/30




18/30



Area of


Responsible

Sequence Activity

Barangay Treasurer 1

2

3

4

5

6

Receives the check for the cashadvance.

Encashes the check.

Pays the officers/employees

listed in the payroll.

Note 1. The officers/employeesshall be required to sign in the

column of the payroll to

acknowledge the receipt of payment from the BT.

Refunds any unclaimed

salaries/wages/honoraria.

Issues OR for the refund.

Files the paid DV/payroll

temporarily to support SCP.


19/30




20/30



Area of


Responsible

Sequence Activity

BarangayTreasurer/Accountable

Officer

Punong Barangay

Barangay Record Keeper

1

2

3

4

5

6

7

8

Prepares the LR based on thecertificate of Travel

completed/Revised Itinerary

of Travel, Ors, Invoices,tickets, etc. and summary of

expenses paid.

Note 1. The LR shall be

prepared in three copies to brdistributed as follows:

Original

City/Municipal Accountant2n d Copy BRK3 r d Copy BT/AO

Check supporting documents

against the LR.

Signs Box A certified portion

of the LR as to the

correctedness of the data.

Submits the duly signed LRtogether with all supportingdocuments to the PB.

Receives LR together withsupporting documents. Signs

Box B portion of LR as to the

purpose of travel/cash advance

duly accomplished.

Forwards LR and supporting

documents to BRK.

Receives the LR and records

in the log book.

Signs Box C of LR as to

completeness of supportingdocuments.


21/30



9 Submits the original LR to theCity/Municipal Accountant on

or before the 5

t h

day of thefollowing month. forwards the3 r d copy to BT/AO and retains

the 2nd copy together with the

supporting documents.


22/30




23/30



Area of

Responsibility/PersonResponsible

Sequence Activity

Petty Cash Fund Custodian

Requesting Official/Staff

Punong Barangay

A

1

2

3

B

4

5

6

Receipt of the authority as

PCFC and establishment of

PCF.

Receives the approved SB

Resolution designating the BTor an official as PCFC.

Forwards the documents to the

BRK for the preparation of theDV for the establishment of

PCF.

Note 1. subject toCertification and Approval of

Payment.

Receives and encashes the

check.

Request for cash from PCF.

Prepares the PCV and signs the

requested by portion of Box A.

Note 2. The PCV shall be

prepared in two copies to bedistributed as follows:

Original to support the

SPPCV2n d Copy Requesting

Official

Forwards the signed PCV to

the PB for approval.

Signs the approved by portion

of PCV.


24/30




Requesting Official/Staff


Requesting officials

7

8

9

10

C

11

12

13

14

15

Forwards the PCV to the PCFC

for payment.

Pays the amount and signs thepaid by portion of Box B.

Receives the amount and signs

the paid by portion of Box B.

Returns the signed PCV to

PCFC and retains 2 n d copy for

file.

Liquidation of the cash

received.

Submit to the PCFC the

Invoice/Official Receipt andothr evidence supporting the

disbursements.

Receives documents and other

evidence of

payments/disbursement.

Retrieves the original PCV and

computed the amount due

to/form the recipient of thefund.

Reimburses the requestingofficial/staff for the advances

made, if any and signs Box C.

Note 3. In case the PCF

received exceeds the

disbursements made, therequesting officials shall

return the excess to the PCFC

and signs Box C.

Signs Box D for the

r ei mb ur se me nt r ec eiv ed o r

l iquidation made and re turns


25/30



the original of PCV to PCFC.


26/30




27/30



Area of


Responsible

Sequence Activity

Barangay Record Keeper 1

2

3

Retrieves paid PCVs andSPPCV on file.

Preapres the DV for thereplenishment of the PCF.

Note 1. The replenishment

shall be equa l to the amount

disburse per SPPCV.

Attaches the or iginal SPPCV

with paid PCVs to the DV forreplenishment of the PCF.


28/30



FINDINGS

B as ed o n t he t ho ro ug h e xa min at io ns , a na lys is a nd d at a

gatherings, the researchers come up with the following findings:

1. The barangay officials did not adhere to the prescribed policies and

procedures outlined by Department of Budget and Management, but

instead they made simple procedures for practicality rather than the

provided procedures above which is a bit complex compare to their

current procedures they usually used.

A cc or di ng t o th em , i f t he y w ill f ol lo w th e s te p- by -s te p

procedures provided above, i t wil l t ake them l ike 2-3 days of

process ing . But s ti ll , the procedures are the same. Documents

needed to be s ign also went through the inspection of the punong

barangay, barangay treasurer.

2. The procedures made by the barangay officials were st i l l legal and

s igned by aut hori zed per sons . I n t er ms o f d is burs emen ts andr ec eip ts , e ve nt ho ug h t he y d o n ot a dh er e t o th e s te p b y s te p

procedures as prescribed, they make sure that al l s ignatures needed

are authorized.

3. There was a proper segregat ion of duti es among the barangay

off ic ia ls . I n t he cours e o f dat a gat he ri ngs, a wel l s tr uc tu red

divis ion of labor was observed in the brangay in such a way that

there is a respective chairman for each projects and functions such

as Administration, Programs l ike Liga, Environmental and the l ike.

With this, the community may be assured that all of their respective

functions are carried at their best.


29/30



RECOMMENDATION

Based on the f indings formulated , the r esearchers s trongly

recommend the following:

1. There must be a better definition of l iabil it ies of the barangay

offic ia ls to the community and to the national government.

Through this systematic process, lesser chance for corruption may

be gained in all aspects of the p rocess.

2. Transparency and accountabi li ty in al l transact ions should

observe at a l l t imes. Through the process of t ransparency and

accountabil i ty, the public wil l have the capabil i ty to examine and

review the full performance and reports of the public sector which

will leads to confidence and trust in the government entities.

3. The Local Government specifical ly the Barangay should be

participatory to improve public engagements that will enhance

the Governments effectiveness and the quality of its decisions .

Knowledge i s widely d ispersed in socie ty , and publ ic off ic ial s

benefi t f rom having access to that d isper sed knowledge. Local

agencies should offer i t s community increased opportunit ies to

part icipate in policymaking and to provide their Government with

the benef i ts of their collective exper t ise and informat ion. They

should a lso sol ic it publ ic input on how they can increase and

improve opportunities for public participation in Government.


30/30


4. There must be also participation from the community . They must

be well informed of the act ivit ies and projects of the barangay

because people themselves should be a part of the system. Active part ic ipa tion of the communi ty wil l promote socia l awareness

among i ts members that might increase i ts public part icipation and

increase opportunities.

5. L oc al go ve rn men t ag en cie s s ho uld b e c ol la bor at ive .

Collaboration actively engages i ts local community members in the

w or k o f t he ir G ov er nme nt . T he l oc al g ov ern me nt s ha ll u sei nnovat ive t oo ls , met hods , and s ys tems t o coopera te among

themselves , across al l levels of Government , and wi th nonprofi t

organizat ions , businesses, and individuals in the pr ivate sector .

They should emanate public feedback to assess and improve their

l evel o f col labora ti on and t o i dent if y new oppor tuni ti es f or

cooperation.