UNIFIED ACCOUNTS CODE

STRUCTURE
Introduction to PPSAs and Revised
Chart of Accounts

Creation and functions of

PSASB
The Public Sector Accounting Standards Board
(PSASB) was created under the 2008 COA
Organization Restructuring.
The function of the PSASB is to assist the
Commission in formulating and implementing the
Philippine Public Sector Accounting Standards
(PPSAS) and establish and maintain linkages with
international bodies, professional organizations and
academe on accounting related fields on financial 2

Guidelines/Issuances on
PPSAS
The standards of PPSAS shall set out the recognition,
measurement, presentation and disclosure
requirements for financial reporting in the Philippine
Government.
The Government Accounting Manual (GAM) shall
provide guidelines to explain and expand PPSAS, and
provide practical assistance to agencies making the
transition from one basis of accounting to another,
particularly if intermediate steps are involved.
Supplemental guidelines shall be issued when the

Setting of standards of PPSAS

Standards of PPSAS are developed either:
By adopting the International Public Sector
Accounting Standards (IPSASs) issued by the IPSAS
Board (IPSASB).
By developing a Standard of PPSAS to deal with a
specific accounting issue that is either not
comprehensively dealt with in an existing IPSAS or
for which an IPSAS has not been developed by the
IPSASB.Timing of application of PPSAS
A Standards of PPSAS applies from the date
determined in issuance by the COA.
4

Objectives of Financial
Reporting
The objectives of financial reporting by public
sector entities are to provide information about the
entity that is useful to users of General Purpose
Financial Reports (GPFRs) for accountability
purposes and for decision-making purposes.

Financial Reporting is not an end in itself, and its objectiv

are therefore determined by the users information need
5

General Purpose Financial Reports

_________________________________
GPFRs are a central component of, and support and
enhance,
transparent
financial
reporting
by
governments and other public sector entities.
These are financial reports intended to meet the
information needs of users who are unable to require
the preparation of financial reports tailored to meet
their purposes.
GPFRs
encompass
Financial
Statements
(FS)
including their notes, and the presentation of
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information that enhances, complements and

Qualitative Characteristics of
GPFRs
Relevance users need it and it is expected to
affect their decisions
Faithful Representation complete, neutral and
free from material error
Understandability information that enables the
users to comprehend its meaning
Timeliness available in time to be useful for
accountability and decision-making purposes
Comparability identify similarities and differences
between two set of phenomena.
Verifiability methodologies, assumptions
disclosed/available.

Presentation of
FINANCIAL STATEMENTS
(PPSAS 1)

Objective of PPSAS 1.
The standard sets out overall considerations
for the presentation of financial statements,
guidance for their structure, and minimum
requirements for the contents of financial
statements prepared under the accrual basis
of accounting.
Generally, the PPSAS is on accrual basis
except for transactions otherwise accounted
for as required by law [Philippine Application Guidance8
(PAG) 1].

PPSAS 1 Coverage

Responsibility for Financial Statements

Components of Financial Statements
Consistency of Presentation
Reporting Period
Effectivity of the Adoption of the Standards
9

Responsibility for Financial

Statements

The responsibility for the fair presentation and

reliability of financial statements rests with the
management of the reporting agency, particularly
the head of finance/ accounting office and the head
of agency or his authorized representative.

10

Statement of Management Responsibility

for Financial Statements

Chief, Financial and

Management
Office/Comptroller

Head of
Agency/Authorized
Representative

11

Components of Financial Statements

A complete set of Financial Statements comprises:
A Statement of financial position;
A Statement of financial performance;
A Statement of changes in net assets/equity;
A cash flow statement;
Comparison of budget and actual amounts, either
as a separate FS or additional budget column in
the FS;
Notes, comprising a summary of significant
accounting policies and other explanatory notes.
12

Cash Flow
Statements
Presentation - (PPSAS 2)

The Cash Flow Statement shall report cash flows

during the period, classified by operating, investing,

and financing.
Cash flows from Operating activities are primarily

derived from the principal cash-generating activities

of the entity. (E.g. Receipts - Taxation, grants;
Payments - Employee costs, suppliers, etc.)
13

Cash Flow Statements

Investing Activities are those that have been

made for resources that are intended to contribute

to the entitys future service delivery. (e.g.
purchase of PPE, proceeds from sale of
investments, etc.)
These are the acquisition and disposal of long-

term assets and other investments not included in

Cash equivalents.
Cash Equivalents

are short-term, highly liquid

investments that are readily convertible to known
amounts of cash and which are subject to an
insignificant risk of changes in value.
14

Cash Flow Statements

Financing
Activities
are those that result in
changes in the size and
composition
of
the
contributed capital and
borrowings of the entity.
(e.g.
proceeds
from
borrowings, repayment
of borrowings, etc.)

15

Reporting Cash Flows

from Operating Activities
PPSAS 2 allows an entity to

use either the direct method

or
indirect
method
in
reporting cash flows from
operating
activities
and
Paragraph 28 encourages
entities to adopt the direct
method.
For

uniformity, the direct

method shall be adopted.
16

Inventori
es
(PPSAS 12)

The
standard
provides
guidance on the determination
of cost and its subsequent
recognition as an expense,
including any writedown to net
realizable value.
It also provides guidance on
the cost formulas that are used
to assign costs to inventories.

17

Inventories are
assets:
a) In the form of materials or supplies to be

consumed
1. in the production process;
2. or distributed in the rendering of services;
b) Held for sale or distribution in the ordinary course
of operations; or
c) In the process of production for sale or
distribution.

18

Net realizable value -

the estimated selling

price in the ordinary
course of operations,
less the estimated costs
of completion and the
estimated
costs
necessary to make the
sale,
exchange,
or
distribution.
Current replacement

cost - the cost the

entity would incur to
acquire the asset on the

19

Cost of inventories shall comprise all costs of

purchase, conversion, and other costs incurred in
bringing the inventories to their present location and
condition.
Cost Formula:
The cost of inventories of items that are not
ordinarily interchangeable, and the goods or services
produced and segregated for specific projects, shall
be assigned by using specific identification of their
individual costs.

20

Otherwise, FIFO or weighted average method shall

be assigned. An entity shall use the same formula for
all inventories having similar nature and use to the
entity.
For consistency and uniformity in costing inventories
in the NGAs, the weighted average shall be adopted.
For inventories with a different nature or use,
different cost formulas maybe justified subject to the
approval of the Commission on Audit.
21

Recognition as an expense
____________________________________
When inventories are sold, exchanged, or distributed, the
carrying amount of those inventories shall be recognized
as an expense in the period to which the related revenue
is recognized.
If there is no related revenue, the expense is recognized
when the goods are distributed or the related service is
rendered.

22

Property, Plant and Equipment

(PPE)
(PPSAS 17)
_____________________________________

This prescribes the standards on the recognition,

measurement
at
and
after
recognition,
depreciation,
impairment,
derecognition
and
disclosure requirements for transactions and
events affecting PPE.
PPE are tangible assets that are held for use in the

production or supply of goods or services, for rental

to others or for administrative purposes and are
expected to be used during more than one
reporting period.

23

Recogniti
on

The cost of an item of PPE shall be recognized as an

asset if, and only if:
a) It is probable that future economic benefits or
service potential associated with the item will
flow to the entity; and
b) The cost or fair value can be measure reliably.
Measurement at Recognition
An item of PPE that qualifies for recognition as an
asset shall be measured at its cost.
Where an asset is acquired through non-exchange
transaction, its cost shall be measured at its fair
value as at the date of acquisition.
24

Measurement after
Recognition
An entity shall choose either the cost model or the

revaluation model as its accounting policy, and shall

apply that policy to an entire class of PPE.
Cost model. After recognition as an asset, an item
of PPE shall be carried at its cost, less accumulated
depreciation and any accumulated impairment
losses.
Revaluation model. PPE shall be carried at
revalued amount less subsequent depreciation and
impairment.
25

Depreciation

is

the
systematic allocation of the
depreciable amount of an asset
over its useful life.
Initial
recognition
of
depreciation begins when it is
available for use such as when
it is in the location and
condition necessary for it to be
capable of operating in the
manner
intended
by
Depreciation
management.shall be for one month if the PPE is
available for use on or before the 15th of the month.
Otherwise, depreciation shall be for the succeeding
month.
26

Depreciation Method
The straight line method of depreciation shall be
adopted unless another method is more appropriate
for agency operation.
A residual value equivalent to at least five percent
(5%) of the cost shall be adopted unless a more
appropriate percentage is determined by the agency,
based on their operation.

27

Estimated
Useful Life

The estimation of useful life of the asset is a

matter of judgment based on the experience of the

agency with similar assets. However, the agency
shall use the Schedule on the Estimated Useful Life
of PPE by Classification prepared by COA (Existing
COA Cir. 2003-007 dated December 11, 2003).
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29

PFM REFORM KEY INITIATIVE

Accounting and Auditing Reform

Regular in-year reporting system on the
status of budget execution, and timely yearend audit reporting of agency financial and
physical operations which will be used in
the budget preparation process, the
Congressional debate on agency budgets
and performance, and the publics
participation in the budget process.
30

Objective
To provide new accounts for the adoption
of the PPSAS which were harmonized with
the IPSAS to enhance the accountability
and transparency of the financial reports,
and ensure comparability of financial
information.
COA Circular 2013-002 dated January
30, 2013 - Adoption of the Revised Chart
of Accounts for National Government
Agencies effective January 1, 2014.
31

Accounting Basis
The basis for coding

the
object
classification in the
Revised
Chart
of
Accounts is accrual
accounting.
Transaction
and
events are recognized
in
the
financial
statements
of
the

32

Codes are assigned to account groups to

facilitate location of accounts in the general
and subsidiary ledgers, to provide systematic
arrangement and classification of accounts
and facilitate preparation of consolidated
Financial Statements as follows:
1 Asset
2

Liabilities

Equity

Income

Expenses

33

Assets
Assets

refer to the economic

resources of an agency that are
recognized
and
measured
in
conformity with the PPSAS.
This comprises any owned physical
object or rights of an entity, with
economic value that is expressed, for
accounting purposes, in terms of its
cost or some other value such as
carrying
value,
fair
value,

34

Liabilities

are present obligations of the entity

arising
from
past
events,
the
settlement of which is expected to
result in an outflow from the entity, of
resources
embodying
economic
benefits or service potential.
Liabilities include certain deferred
credits involving money received in
advance of it being earned, such as
deferred or unearned revenue,
or
customer advances that are not

35

Equity
refers to the residual
interest in the assets of
an entity after
deducting all its
liabilities. This is also
referred to as net
assets under the
Philippine Public Sector
Accounting Standard
(PPSAS).

36

Income

refers to the gross inflow of economic

benefits or service potential during the
reporting period when those inflows
result in an increase in net
assets/equity, other than increases
relating to contributions from owners.
This is also referred to as revenue
under the PPSAS.

37

Expenses
Refers to an outflow of resources to
another individual or entity as payment
for an item or service.
The incurrence and payment of an
expense usually used up an asset or a
corresponding liability is incurred.

38

Expense by Allotment
Class

Under the UACS, Expenditures are

categorized by Allotment Class which
correspond to the 3rd digit of the Object
Code,
as follows:Services
1 - Personnel
2 - Maintenance & Other Operating
Expenses
3 Financial Expenses
4 Direct Costs (manufacturing and
trading)
5 Non-Cash Expenses

39

The Account Code Structure

consists of eight (8) mandatory
digits as follows:
0 00 00 00 0
Account Group
Major Account
Group
Sub- Major Account
Group
General Ledger
Accounts
General Ledger ContraAccounts
40

Account Group represents the

classification as to assets, liabilities,

equity, income and expenses.

Major Account Group represents

classification within the account
group, e.g. for assets major accounts:
Cash and Cash Equivalents,
Investments, Receivables,
Inventories, etc.
Sub-Major Account Group
represents classification within the
major account, e.g. for Cash and
Cash Equivalents: Cash in Bank-Local
41

General Ledger (GL) accounts

represent the accounts to be

presented in the detailed financial
statements, e.g. Cash in Bank Local
Currency, Current Account, Cash
MDS, Regular, Cash MDS, Special
Account,
Cash

MDS,
Trust,
etc.
This is composed of two segments:
The first two digits from the left is the GL
code; and the last digit is reserved for
contra accounts like Accumulated
Depreciation, Allowance for Impairment.
42

Coding of Asset:
Without contra account
1 01 04 04 0
Asset
Cash and Cash
Equivalents
Treasury/Agency Cash
Accounts
Cash - Modified Disb. SystemRegular
General Ledger ContraAccount
43

Coding of Asset:
With contra account
1 06 05 02 1
Asset
Property, Plant and
Equipment
Machinery and
Equipment
Office
Equipment
Accumulated Depn Office
Equipment
44

Object and Sub-object

codes
For
object
coding,
description and codes
are drawn from COA
Revised
Chart
of
Accounts (8 digits). A
2-digit sub-object code
shall be used to show
the
breakdown
of
selected accounts.
45

Who are responsible for the

Sub-object codes?
The DBM has an overall responsibility
for the assignment of Sub-Object Codes
in the UACS.
All agencies are responsible for the
utilization of Sub-Object Codes in their
budget,
accounting
and
cash
transactions.
46

Responsible for Sub-object codes

The responsibility for providing details
to DBM on the sub-object coding are as
follows:
Accounts

Agency
Responsible for
Disaggregation

Cash in Bank

BTr

Taxes

BIR

Import Duties

BOC

Non-Tax Revenues

DOF/BTr
47

Responsible for Sub-object codes

Accounts

Personnel Services

Agency
Responsible for
Disaggregation
DBM

Maintenance & Other

Operating Expenses
(MOOE)

DBM/COA

Financial Expenses

DBM/COA

Capital Outlays

DBM
48

Some examples of application of

Object and Sub-Object Codes
Particulars

COA GL UACS with

Accoun Sub-Object
Code
ts

Salaries and Wages - Regular

50101 50101010
010
-00

Basic Salary - Civilian

5010101001

Base Pay Military/Uniformed

5010101002

Personnel

Salaries and Wages

Casual/Contractual

50101 50101020
020
-00

Rent/Lease Expenses

50299 50299050
050
-00 49

Some examples of application of

Object and Sub-Object Codes
Particulars

Repairs and Maintenance

Machinery and Equipment

COA GL UACS with

Accoun Sub-Object
Code
ts
50213 50213050
050
-00

Machinery

5021305001

Office Equipment

5021305002

ICT Equipment

5021305003

Communication Equipment

5021305007 50

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