Updates on DBM Regulations

Updates on DBM Regulations
(A Presentation for the 26th DepEd National Seminar/Workshop on the Preparation and Reconciliation of the CY 2011 Year-End Financial Reports) By: Assistant Secretary Luz M. Cantor January 30, 2012 Grand Astoria Hotel, Zamboanga City

Outline of Presentation
DepEd FY 2012 Budget per RA 10155 Budgetary Reforms Budget Preparation Budget Authorization & Approval Budget Execution Budget Accountability Reiteration of Existing Policies Flexibilities allowed under CY 2012 GAA Emphasizing the “No-Report, No-Release” policy Important Timelines Way Forward Government Integrated Financial Management Information System (GIFMIS) Colleagues in government the outline of my presentation is as follows.

DepEd FY 2012 Budget per RA 10155

DepEd FY 2012 Budget (FY 2012 GAA, RA 10155)
Budget Level P216,353,685* (in thousand pesos) * includes attached agencies, RLIP and SBP

DepEd FY 2012 Budget (FY 2012 GAA, RA 10155)
Budget Level (in thousand pesos)

Budgetary Reforms

Objectives of 2013 Budget Preparation
Deepening of On-going PEM Reforms Fiscal consolidation Budgeting for 5 KRAs Continuance of 3 Pillar Reforms: MTEF, OPIF, ZBB Disaggregation of remaining lump sum funds Expanding Participatory Budgeting Greater CSO participation Reviving RDC involvement Introduction of Bottom-up Budgeting In the FY 2013 Budget Preparation, we are aiming 1) to deepen the implementation of the reforms we have started in the 2012 Budget and the past years budgets and 2) to expand participative budgeting by involving more stakeholders in the budget process. Last year, we started engaging the CSOs in giving feedback on the implementation of ongoing programs. This year, we introduce bottom-up budgeting as a natural strategy for the fleshing out of lump sum funds, and the quest for the convergence of key services under the 5 KRAs. 7

Public Expenditure Management Reform
BUDGET PREPARATION Public Expenditure Management Reform Goal: Establish Performance-Based Budgeting Aggregate Fiscal Discipline * Allocative Efficiency * Operational Efficiency MTEF Medium-Term Expenditure Framework OPIF Organizational Performance Indicator Framework ZBB Zero-Based Budgeting Approach We continue the Public Expenditure Management (PEM) reforms and its 3 pillar reforms to ensure that the budget will focus on results and on fiscal discipline.

Integrating OPIF into NEP(NBC 532)
BUDGET PREPARATION Integrating OPIF into NEP(NBC 532) Refine MFOs to capture mandates/business lines of department Have an integrated set of performance indicators (PIs) w/c cover quantity, quality, timeliness, cost Restructure PAPs to establish links with MFOs for better cost estimation and expenditure Prioritization Develop standards for OPIF throughout government by applying common methodology to the exercise Under the OPIF effort, we issued NBC 532 for the refinement of the MFOs, PIs, and PAPs to support one MFO and the grouping of the PAPs under the MFOs will improve the budget structure and directly link the budget and the OPIF. This program structure will also facilitate the design of a coding structure of the budget that will harmonize budgeting, accounting and auditing.

Continue to Focus on the Social Contract (E.O. No. 43)
BUDGET PREPARATION Continue to Focus on the Social Contract (E.O. No. 43) Transparency, accountability and open governance; Poverty reduction and empowerment of the poor and vulnerable; Rapid, inclusive and sustained economic growth; Just and lasting peace and the rule of law; and Integrity of the environment and climate change adaptation and mitigation While continuing to focus on the Social Contract under the 5 KRAs as shown on the screen, we can force the issue of localization for greater effect with the greater participatory budgeting. For FY 2013, the bottom up budgeting will help the poor municipalities identify the program focus and services they need from the national agencies.

Fleshing out of Lump Sum Funds
BUDGET PREPARATION Fleshing out of Lump Sum Funds Target: All remaining lump-sum funds in departments are fleshed out in the FY 2013 budget Rationale: Improve transparency & regional distribution Facilitates early implementation Strategy: Participative budgeting with - Poor municpalities - CSOs - RDCs For the FY 2012 budget preparation, we were able to flesh out some P150.5 billion worth of lump-sum funds. To further promote transparency and to allow agencies to measure the outcomes of their spending, we will target the fleshing out of the remaining lump-sum funds in departments for the FY 2013 budget preparation. This is where we think the participatory budgeting will be of most help.

Participation of CSOs and Other Stakeholders for M & E
BUDGET PREPARATION Participation of CSOs and Other Stakeholders for M & E FY 2012 Budget Preparation (6 Depts. and 3 GOCCs) Social Sector (DepEd, DOH, DWSD) Economic/Infra (DA, DAR, DPWH) GOCC (NFA, NHA and NHMFC) FY 2013 Budget Preparation (6 more Departments) Social (DOLE) Economic (DOTC, DOT, DENR) Gen. Public Service (DOJ, DILG) GOCCs (NEA, NIA, LRTA) As a part of the OGP, CSO/stakeholder consultations will be expanded to cover the participation of six more departments (DOLE, DOTC, DOT, DENR, DOJ and DILG) and three (3) GOCCs (NEA, NIA, LRTA) to make agency programs more responsive. We have processed the feedback from the CSO forum to improve the CSO participation in budgeting this year. Notes: Perhaps CSO consultations can be easier around multi-agency programs in the provinces. Their role in RDC should be advocated so that RDCs will benefit from the CSOs.

Bottom-Up Budgeting to Consider Needs of Target Poor Communities
BUDGET PREPARATION Bottom-Up Budgeting to Consider Needs of Target Poor Communities 609 target poor municipalities chosen by HDPR Cluster Pilot the bottom up approach in budgeting in 300 municipalities with HDPR & NAPC Foster convergence between the needs of 300 poor municipalities, funds available from LGUs and the programs to be delivered by NGAs Assist departments to flesh out lump sum funds Strengthen CSO participation in participative budgeting Agencies to be included in the pilot are DA, DAR, DENR, DSWD, DOH, DEPED, PHIC Role of local planning committees as venue for LGU-NGA coordination HDPR and Good Governance Clusters to resolve issues For FY 2013, 0ne of the interesting exercises being piloted by the HDPR Cluster & the NAPC now is the adoption of the Community Driven Development approach (CDD) or participatory budgeting in 300 poor municipalities. The municipalities are being trained in that approach and the results of the exercise will be brought to the Rural Development & CCT departments through the local development councils & the Poverty Cluster. The DBM will facilitate the exercise to include the approved projects in the 2013 Budget. A total of 609 poor municipalities have been chosen by the HDRP Cluster to be involved in this effort as part of the Anti-poverty program. And the bottom up budgeting will be piloted in around half of the municipalities. The objective is really an affirmative action to ensure that the needs of the poor communities are considered in the programs to be delivered by initially 2 groups of agencies (the rural development and the 4 Ps and universal health agencies) in those municipalities and that their services in these municipalities converge. So the agencies targeted to be involved in the effort are: DA, DAR, DENR, DSWD, DEPED, DOH and PHIC. 13

Bottom-up Budgeting BUDGET PREPARATION
January to March: Target municipalities to develop & finish LGU plans, inputting poverty and gap studies & discussion with barangays, CSOs & reps from marginalized groups. January- ACOs to issue participation guidelines to AROs - DILG & DBM to brief target municipal core teams & AROs - NAPC & DSWD to work with CSOs, municipal focal persons to organize grassroot groups to engage with LGU & NGAs March- W/ DILG & DBM, Municipal Development Councils to engage w NGAs To meet the budget schedules, the way the process will go is as follows: January to March: Target municipalities to develop & finish LGU plans, inputting poverty and gap studies & discussion with barangays, CSOs & reps from marginalized groups. January- ACOs to issue participation guidelines to AROs - DILG & DBM to brief target municipal core teams & AROs - NAPC & DSWD to work with CSOs, municipal focal persons to organize grassroot groups to engage with LGU & NGAs March- W/ DILG & DBM, Municipal Development Councils to engage w NGAs 14

Bottom-up Budgeting BUDGET PREPARATION
April to May: AROs with HDPR to work for incorporation of projects requested by target municipalities in NGA budget for ARO can meet with other AROs to ensure convergence of service delivery. May to July: HDRP to track decisions on projects. LDCs and grassroots orgs to ensure convergence of agreed projects with LGU AIPs HDPR to establish tracking, alliance building & capacity building to keep target municipalities engaged in budget legislation & execution. April to May: AROs with HDPR to work for incorporation of projects requested by target municipalities in NGA budget for ARO can meet with other AROs to ensure convergence of service delivery. May to July: HDRP to track decisions on projects. LDCs and grassroots orgs to ensure convergence of agreed projects with LGU AIPs HDPR to establish tracking, alliance building & capacity building to keep target municipalities engaged in budget legislation & execution.

BUDGET AUTHORIZATION AND APPROVAL
Timely approval of the budget The second phase of the Budget Cycle is on Budget Authorization and Approval. As you know, the FY 2012 budget was signed by the President on December 15, This shall enable agencies to start implementing their programs and projects early in Our aim is to do this annually to prevent the occurrence of a reenacted budget which prohibits the executive branch to implement new PAPs.

BUDGET EXECUTION DBM Issuances NBC No. 534 dated Dec. 8, 2011
Agency Preparation and Submission of Budget Execution Documents (BEDs) – CY 2012 Plans/Targets NBC No. 535 dated Dec. 29, 2011 Guidelines on the Release of Funds for CY 2012 CL No dated Dec. 26, 2011 Validity of Notice of Cash Allocation On the comparison of the budget policies/procedures in 2011 versus we can easily take note of the differences i.e.,” what is new, or has been modified and what are the existing ones. “something new and something old”. So, let us recall the DBM Circulars issued containing the policies and procedures for the 2012 budget execution. So far, 3 Circulars have been issued (all of them dated as early as December) in anticipation of the early enactment of the 2012 GAA.

BUDGET EXECUTION Submission of CY 2012 Agency Plans/Targets NBC No. 534 calls for the early submission by agencies/operating units (OUs) of the CY 2012 BEDs (with modified formats) containing their plans/targets, to wit: * Financial Plan * Physical Plan * Monthly Cash Program * List of Not Yet Due and * Program of Monthly Income Demandable Obligations One of the first changes introduced for budget execution, is regarding the preparation and submission of BEDs by agencies/OUs to DBM. In the previous years, it was our practice to wait for the approval of the GAA before requiring agencies to submit their BEDs. For 2012, however, agencies are directed to prepare early their BEDs without waiting for the approval of the GAA. Basis of their BEDs is the FY 2012 NEP level, to enable DBM, to facilitate the release of funds on the first working day of the year (i.e., January 2, 2012) and to make the releases consistent with the agencies’ program/schedule of work. So the deadline for the submission was on December 22, 2011 (1 week before the start of the year). But apparently, not all agencies were able to comply on the deadline set. Probably because of the very short notice from DBM, the Circular was issued in December 8 and deadline was on December Because of this low compliance rate, said deadline was extended to January 16, For this purpose, DBM sent call-up letters to the Department/Agency updating them of the status of compliance. Also, aside from the early submission of BEDs, the formats of the BEDs were modified. This is to consider the recent information needs and monitoring directions i.e., particularly, monitoring of major programs/projects as aligned to the five (5) priority areas of spending of the government , otherwise known as the Key Result Areas pursuant to EO No 43. FY 2011 FY 2012 Basis CY 2011 GAA level CY 2012 NEP level - December 22, 2011 - January 16, 2012 (ext.) Deadline February 15, 2011

BUDGET EXECUTION CY 2012 Fund Release System per NBC 535
submission of BEDs by the agencies. issuance of spending authorities (for obligation and disbursement) by DBM to agencies. implementation of programs and projects by the agencies, out of the authorities issued by DBM Budget Accountability submission of budget accountability reports (BARs) by the agencies. review of agency performance by DBM. Next to the Circular on the submission of agencies’ BEDs, DBM issued NBC 535 in December 29, 2011 (the Guidelines on the Release of Funds for CY 2012, which we call, our bible in fund releases). The Circular covers, not only budget execution but also touches on budget accountability. The outputs during execution are inputs to accountability, and preparation of the budget in the succeeding year, such that: BEDs of agencies containing their plans & targets are basis of DBM in issuing spending authorities to agencies. Then agencies incur obligations, enter into contracts and effect payments of obligations out of the spending authorities. After that, agencies should account how the funds released to them were utilized, thru the submission of reports. In turn, these reports shall be used in the periodic review of agency performance. It is a cycle.

Comparative Procedures in the Release of Funds
BUDGET EXECUTION Comparative Procedures in the Release of Funds FY 2011 FY 2012 1. Approval & Effectivity of the GAA Approval December 27, 2010 Effectivity - January 1, 2011 Approval - December 15, 2011 Effectivity - January 1, 2012 2. Appropriation Cover R.A Jan. 1 to Dec. 31, 2011 operations R.A Jan. 1 to Dec. 31, 2012 operations For two (2) consecutive years (last year and this year), the annual GAA has been enacted before the start of the year. Congress has been supportive of this Administration’s goal, that is not to operate on a reenacted budget. The 2012 GAA under RA was approved in Dec. 15 and became effective on January 1, 2012. The validity of appropriations is still two (2) years, with the exception of PS. 3. Validity of Appropriation Available for release and obligation up to December 31, 2012, with the exception of PS. Available for release and obligation up to December 31, 2013, with the exception of PS.

BUDGET EXECUTION How is the Agency Specific Budget Disaggregated? - thru the Agency Budget Matrix (ABM) FY 2011 FY 2012 Authorized Appropriation = Not Needing Clearance (NNC) This Release PS MOOE = % CO Needing Clearance (NC) Authorized Appropriation = Not Needing Clearance (NNC) This Release PS MOOE = 100% CO Needing Clearance (NC) Budgetary items that do not need clearance or approval from certain authorities were categorized as Not Needing Clearance and were released 100%. In terms of percentage to the total appropriation for regular budgets of departments/agencies, the allotment comprehensively released thru the ABM is equivalent to 90.5%, an increase of 10.6%, compared to the 79.9% comprehensive release in 2011. Program Compre % of Release Balance Allotment over Program Depts. 868, , % 82,318 PS 426, , % ,706 MOOE , , % CO 208, , % 58,056 Thus only 9.5% remains under NC portion. same

BUDGET EXECUTION ABM (continuation) FY 2012 FY 2011
Approval of ABM - Jan. 31, 2011 Pending approval of ABM, agencies WERE AUTHORIZED to incur overdraft in obligations for regular operating requirements. Overdrafts in obligations were adjusted/charged against the comprehensive allotment released thru the ABM. Comprehensive release of allotment by allotment class. Approval of ABM - Jan. 2, 2012 With the early approval of ABM, agencies ARE NOT authorized to incur overdraft in obligations for regular operating requirements. Actual obligations shall be charged against the comprehensive allotment thru the ABM. Comprehensive release of allotment by allotment class, broken down by sub-object of expenditure. The timely enactment of the CY 2012 GAA resulted to two (2) procedural efficiencies: 1. On the release of funds: This enabled DBM to fulfill its commitment to release to the agencies at the start of the year, their respective ABMs on January 2, 2012 (100%). Since the funds are already available to the agencies, they will be able to fast track or accelerate implementation of priority programs/projects and disbursements of funds, as well. 2. On accounting procedures Agencies no longer incur overdraft in obligations, given the early release of funds. Another modification is the release of allotment, not only by allotment class (PS, MOOE and CO) but also by sub-object of expenditure. This is in preparation for the automation of budgeting and accounting transactions as well as reports under Government Integrated Financial Management Information System (GIFMIS).

BUDGET EXECUTION Personal Services (PS) FY 2011 FY 2012
Comprehensive Release of Allotment - NNC of ABM Personal Services (PS) FY 2011 FY 2012 Filled Positions of NGAs XX Filled Positions of NGAs Lump-sum for PS under DepEd Equivalent Records Forms Conversion to Master Teacher Positions Reclassification of Positions Hardship Pay This slide shows the budget items which are part of the comprehensive allotment release. For the first time, the various lump-sums for PS under the budget of DepEd . Examples: ERF, Conversion to Master Teacher Positions, Reclassification of Positions and Hardship Pay, Chalk allowance. The released amount can be obligated only upon submission of various documentary requirements detailed in Item of NBC 535 Just for emphasis, considering that 100% release was already made for PS, the amount released can be used by the agencies for requirements pertaining to 3rd tranche compensation adjustments and corresponding adjustment in govt premiums for PHILHEALTH, etc. as well as PS deficiency arising from filling up of positions. Later, agencies, may (during the 3rd or 4th quarter) request for release of the SARO for the purpose chargeable against the MPBF, subject to agency compliance of the required quarterly BARs.

MOOE and Capital Outlay
BUDGET EXECUTION Comprehensive Release of Allotment - NNC of ABM MOOE and Capital Outlay FY 2011 FY 2012 Quick Response Funds (DSWD, DND, DOH, DA, DepEd, DPWH) Lump-sum for Repair and Maintenance of Schools Buildings of DepEd CMIs of agencies - (with list of implementing units) On MOOE/CO, these are the budget items newly placed under NNC The QRF of six (6) departments (which serves as stand-by fund to be used for relief and rehab programs in areas stricken by calamities, crisis etc. ). These are fully released, in compliance with the directive of OP to make this available to these agencies concerned at the start of the year. Lump-sum for repairs and maintenance of school buildings of DepEd. - just appropriate so that DepEd can start this activity in the first quarter (dry season). CMIs of agencies which have already been fleshed out, meaning…already or supported with the list of implementing units and their corresponding allocation. Some examples, among others are: (see slide) X

BUDGET EXECUTION Budget Items Comprehensively Released, but subject to Conditional Obligation For DepEd: Lump-sums for PS / Lump-sum for Repair and Maintenance of School Buildings Procurement of motor vehicles and motorized equipment Provisions for Supplies and Materials and Office Equipment Subject to submission to DBM, of the CY 2012 Annual Procurement Plan for Common-Use Supplies and Equipment pursuant to CL /6-A. Lump-sum appropriations or Centrally-managed Items Subject to identification of specific projects and other requirements per Special Provision of their respective budgets, list of IUs and allocation per IU. Research and Development Consistent with the Master Plan of the DOST and DA. Others: Computers and IT equipment; Communication equip; firearms; books procured other than TNL exceeding 5 copies; on-going FAPs; and grants, subsidies, contributions- subject to clearances from agencies concerned & certain conditionalities. Please note also that there are items, although requiring certain clearances/approval from other government agencies and supporting documentation, are already included in the comprehensive release. However the agency can only obligate such releases subject to compliance of the requirements needed, as specified in the Guidelines. Specific mention - Item 3 of the enumeration regarding Provision for Supplies and Materials and Provision for Equipment. Said releases can only be obligated once the agency has submitted to DBM, its APP -CSE for CY 2012. This is in line with AO 17 (as implemented by CL /2011-6A) which directed the use of Procurement Service and PhilGEPs in the procurement activities of all government agencies. The deadline of submission was on November 15, 2011. We are asking the help of COA to implement this policy. Agencies are enjoined to their APP-CSE to PS (as its basis for projection of inventory requirements, scheduling of procurement). On the part of Operations Group (BMBs/ROs), as basis for validating the consistency of the APP-CSE with budget allocation and for determining the appropriate budget level of their requirement for commonly used supplies and equipment.

NC portion of ABM – for Issuance of SARO
BUDGET EXECUTION NC portion of ABM – for Issuance of SARO FY 2011 FY 2012 Lump-sum appropriations or CMIs Unfilled positions Other budgetary provisions: Additional amounts for existing programs and projects New items in the budget Items / provision for Conditional Implementation Lump-sum appropriations or CMIs (w/o details as of ABM preparation) X Other budgetary provisions: X New items in the budget Items/provisions for Conditional Implementation Next, are items classified as NC, thus shall be released thru issuance of SAROs. Some of these items are: Lump-sum appropriations or CMIs without details as of ABM preparation, and Other budgetary provisions such as new items in the budget and items/provision for Conditional Implementation. Budget provisions for unfilled positions of certain agencies (for military/uniformed personnel, educational institutions, hospitals, etc) are no longer integrated in their regular budgets, but instead lodged under the MPBF. Release of this amounts shall be subject to the requirements per special provision of the MPBF. For FY 2012, additional amounts for existing programs and projects are included in the NNC portion.

Disbursements – Issuance of NCAs
BUDGET EXECUTION Disbursements – Issuance of NCAs FY 2011 FY 2012 NCAs for 1st semester regular operating requirements (Jan-June) - comprehensively released based on: tentative MCP prepared by DBM. Tentative MCP is updated based on the submitted agency MCP as well as SARO releases made. Succeeding comprehensive NCAs were issued based on the updated MCP. NCAs for 1st semester regular operating requirements (Jan-June) - comprehensively released based on: MCP submitted by the agency Succeeding NCAs for 3rd and 4th quarter requirements, shall be contingent on the submission of BEDs and Budget Accountability Reports by the agency/OU. We will focus our discussion on the NCA. As basis of DBM in determining the disbursement requirements of agencies, we require them to submit their MCP (one of the BEDS required under NBC 534). Again, what is an MCP? The MCP reflects the disbursement requirements broken down by month. The monthly requirement should not be derived merely by dividing the total annual requirement into 12 months, but should consider the factors and seasonalities that will influence the disbursement behavior, in accordance with the work program. For 2012, there are changes in our disbursement procedures. 1. Release of NCA for the 1st semester supposedly shall be supposedly based on the MCP submitted by the agencies. 2. Release of NCA for the second semester will not be done automatically. There will be separate releases for the 3rd and 4th quarter, respectively. These shall be subject to the submission of budget accountability reports or BARs.

BUDGET EXECUTION Validity of NCAs FY 2011 FY 2012 Regular MDS Account
Effective Jan, 2012 per CL No NCA programmed and credited for a specific month is valid until the last working day of the said month. Regular MDS Account 1st to 3rd Quarter NCA programmed for a specific month is valid until the last working day of the said month. 4th Quarter NCA credited for the month shall be valid until the last working day of the quarter. An exceptionally different behavior/pattern of disbursement was noted after the assessment of the disbursements level as of end of June 2011 was made. There was an “under spending” noted, which may have resulted from the very thorough review by certain departments of their programs/projects, thus slowing down their implementation. Since BTr has sufficient available cash, the month-end validity of NCA was relaxed. Instead, the quarterly lapsing of NCA was adopted during the last quarter of CY 2011. For 2012 however, the month-end validity of NCA for Regular MDS Accounts has already been restored, pur. to CL issued in December 26, 2011.

Flexibilities Allowed per CY 2012 GAA
BUDGET EXECUTION Flexibilities Allowed per CY 2012 GAA Use of Savings under Agency Specific Budget Augmentation of any item under PS and MOOE, except CIF Priority payment of PS deficiency. Use of Fees and Excess Income Fees collected from seminars, trainings and conferences; Proceeds from sale of publications for cost of printing/dissemination; Proceeds from sale of non-serviceable, obsolete & unnecessary equipment; Service fees collected from BIR, GSIS, HDMF, PHIC and mutual benefits associations/cooperatives for the operation of a Provident Fund; Excess Income realized and deposited with the BTR . The flexibilities allowed under the GAA in the utilization of funds are categorized into: Use of savings Agencies can augment any item under PS and MOOE, with the exception of Confidential Intelligence Fund. Also, the payment of authorized PS benefits, among other expenses, shall be given first priority in the use of savings. 2. Use of fees and Excess Income Use of excess income is an incentive given to performing agencies in terms of revenue collections.

Transparency - Disclosure in the Website
BUDGET ACCOUNTABILITY Transparency - Disclosure in the Website GP No Depts/agencies implementing infrastructure projects shall post in their websites, certain data/information prior to start of bidding for the project/s, such as: Project title, detailed description for each project (nature & location) Cost breakdown for materials, labor and overhead expenses GP No. 93 – Agencies shall maintain a transparency seal to be posted in their websites which shall contain the following: Agency’s mandate, functions, its officials w/ position/designation & contact information Annual reports for the last three years Respective approved budgets and corresponding targets Major programs and projects categorized in accordance with the 5 Key Results Areas Evaluation and/or assessment reports Annual procurement plan, contracts awarded and the name of contractors/suppliers Just like in 2011, the 2012 budget has also ingrained transparency and accountability in the use of public funds. Thus, the 2012 GAA contains provisions that seek to ensure that government resources shall only go to the intended beneficiaries. In line with transparency, we have the mandatory disclosure of budget information via information technology, for the public to access. GP Nos. 89 requires agencies implementing infrastructure projects to post in their websites, certain data/information prior to start of bidding for the project/s, such as: Project title, detailed description for each project (nature & location) Cost breakdown for materials, labor and overhead expenses GP No 93 requires all agencies to maintain a transparency seal to be posted in their websites which shall contain the following: Agency’s mandate, functions, its officials w/ position/designation & contact information Annual reports for the last three years Respective approved budgets and corresponding targets

BUDGET ACCOUNTABILITY
What is the state of agency compliance to BEDs & BARs ? What is the state of agency compliance to the prescribed BEDs and BARs? On the slide, you can see a picture which may describe the situation. In this sport activity, kahit na sabay-sabay ang take-off ng runners, they will never reach….the finish line ..all of them na sabay-sabay..at the same time at the same speed. This is because of individual differences/capabilities. The state of agency compliance to our reporting requirements is just the same. Uneven compliance can always be noted. There are agencies which are conscious of the deadlines, some submit reports at their own timelines, and a few don’t submit reports at all. WHAT COULD BE REASONS FOR THIS? Some of the reasons are : 1) Agencies prepare too many reports, not just for submission to DBM but also to other oversight agencies, and 2) Difficulty in consolidating reports, specially for departments/agencies with decentralized set--up. So. HOW CAN AGENCY COMPLIANCE BE IMPROVED? - On the part of DBM, what we can do at this point is improve our coordination with counterparts from the agencies, widen our communication line and provide technical assistance to agencies, if necessary. On a bigger scale, the situation can be improved through the help of Information Technology (IT). However, this will not be done by DBM alone, but together with the other oversight agencies. Note: The President wants a monthly financial report from DBM. So all Department Secretaries should comply.

Improving agency compliance of BEDs and BARs to DBM
BUDGET ACCOUNTABILITY Improving agency compliance of BEDs and BARs to DBM Remind agencies thru call-up letters / phone; Encourage on-line submission of reports i.e. SAOB; Close coordination with agencies and provide technical assistance, if necessary; Post in the DBM website, the reports submitted by agencies and highlight the agencies with no submission; Implement the “no-report, no-release” policy. HOW CAN AGENCY COMPLIANCE BE IMPROVED? On the part of DBM, what we can do at this point are the following : Remind agencies thru call-up letters / phone; Encourage on-line submission of reports i.e. SAOB; Close coordination with agencies and provide technical assistance, if necessary; Post in the DBM website, the reports submitted by agencies and highlight the agencies with no submission (“name” & “shame” policy); Implement the “no-report, no-release” policy.

BUDGET ACCOUNTABILITY
For the first time, we have included in our Circular, a provision identifying the budget items that shall not be released to agencies, in the event of non-compliance of reports. While it may be easy to give incentives, it is always difficult to implement penalties and sanctions. As far as I know, we should not defer or withhold releases which will impact on the critical programs and projects and specially if affecting the beneficiaries...and that is the public. So, this is one of the reasons why in the Circular, only the budget items pertaining to PS benefits were identified. In the matrix, if the BARS as of December 31, 2011 were not yet submitted, the 3rd tranche compensation adjustment shall not be released. Non-submission of the 1st quarter BARS will cause the withholding of ….so on

Review of Agency Performance
BUDGET ACCOUNTABILITY Review of Agency Performance What ? Why ? How? Conducting a performance review is like solving a puzzle. We have to look into several considerations and different scenarios. How are we going to put together, all the pieces of information we gathered from our own database and from reports provided by agencies. Review becomes even more challenging in cases where data/reports are not complete. So again, what we are emphasizing is the timely submission of the reports/documents required (BEDS and BARs). This will enable DBM to come-up with the full report of the status of the budget and how the budget was implemented by agencies. The President is very keen on utilization of funds by Departments/agencies especially so last year when government experienced huge amounts of under spending vs. progam. When ?

Performance review shall :
BUDGET ACCOUNTABILITY Performance review shall : be based on the following documents/reports of agencies: - BEDs for plans/targets; - BARs for accomplishments; - Monthly flash reports (consolidated by dept.) cover financial utilization, physical accomplishments and revenue generation; serve as guide of DBM in deciding whether reallocation of fund or additional release is necessary and basis in reporting the status of the budget to the President, on a monthly basis.

Performance review will determine:
BUDGET ACCOUNTABILITY Performance review will determine: Budget Execution and Accountability HOW much and WHAT cost the govt. provides for goods and services to the public? WHAT is the level of department/agency performance, in terms of physical outputs and financial accomplishment ? In case performance is below target WHY are the targets/plans not attained and what factors and events influence the level of performance? HOW to catch-up and What necessary/improvements shall be undertaken to catch-up with or even surpass the dept./agency plan? Budget Preparation How much is the appropriate level of agency budget, based on actual performance? We all know that without the complete submission of BEDs and BARs and other Performance Reports from agencies, DBM and other oversight agencies will have difficulty in conducting performance review. Here are some guide questions in the conduct of review: Budget Execution and Accountability HOW much and WHAT cost the govt. provides for goods and services to the public? WHAT is the level of department/agency performance, in terms of physical outputs and financial accomplishment ? In case performance is below target WHY are the targets/plans not attained and what factors and events influence the level of performance? HOW to catch-up and What necessary/improvements shall be undertaken to catch-up with or even surpass the dept./agency plan? Budget Preparation How much is the appropriate level of agency budget, based on actual performance?

Important Dates to Remember
BUDGET ACCOUNTABILITY Important Dates to Remember Submission of BEDs December 22, 2011 / January 16, 2012 (extension) Submission of BARs On the dates prescribed under NBC 507/507A; Consolidated Flash Reports (Financial and Physical Reports) Every 10th day of the month Submission of request for realignment of released allotment under the FY 2011 budget June 30, 2012 Submission of requests that will require issuance of SARO and NCA in FY 2012 November 15, 2012 So that’s is it. Again, we would like to remind agencies of the following deadlines.

Way Forward

GIFMIS Committee Resolution 01-2011
I. Government Integrated Financial Management Information System (GIFMIS) PFM Reforms Roadmaps GIFMIS Committee Resolution Signed by the PFM/GIFMIS Committee on January 19, 2011. Approved by the PFM/GIFMIS Principals by February 9, 2011. Presented the PFM Reforms Roadmap to the President during the Philippine Development Forum (PDF) Meeting on February 26, 2011. In January 2010, COA, DBM and DOF entered into a MOA on the cooperation to foster the development of the Government Integrated Financial Management Information System (GIFMIS). Then a workshop was held in February 2010 for the purpose of drawing up a strategic plan for a whole government approach at Public Financial Management (PFM) Reforms which will enable the government to perform its function of maintaining fiscal discipline, fund allocation efficiency and operational efficiency for effective delivery of public services. The strategic plan was later called the PFM Reforms Roadmap which was signed by the GIFMIS Committee on January 19, 2011 and approved by their principals on February 9, 2011. This was likewise presented to the President during the Philippine Development Forum (PDF) meeting on February 26, 2011. 39

Directing the Integration and Automation
I. Government Integrated Financial Management Information System (GIFMIS) Executive Order No. 55 Directing the Integration and Automation of Government Financial Management Systems Signed by the President on September 6, 2011

Executive Order No. 55 Salient Provisions:
I. Government Integrated Financial Management Information System (GIFMIS) Executive Order No. 55 Salient Provisions: Installation of PFM systems within the term of the President ( ), including: GIFMIS Treasury Single Account (TSA) Efficient budget release system Regular in-year budget execution reporting system Timely year-end audit reporting Systematic recording and reporting of liabilities of government The Salient Provisions of Executive Order No. 55 are as follows: Installation of PFM systems within the term of the President ( ), including: GIFMIS Treasury Single Account (TSA) Efficient budget release system Regular in-year budget execution reporting system Timely year-end audit reporting Systematic recording and reporting of liabilities of government 41

Objective and Time Frame
I. Government Integrated Financial Management Information System (GIFMIS) GIFMIS TRACK 1 Objective and Time Frame To meet the government’s immediate need for a functioning GIFMIS with minimum changes in or slightest reengineering of PFM business processes and reassignment of roles and responsibilities over financial transactions. To be completed in 8 months from PMO establishment. GIFMIS Track 1 objective and Time Frame are as follows: To meet the government’s immediate need for a functioning GIFMIS with minimum changes in or slightest reengineering of PFM business processes and reassignment of roles and responsibilities over financial transactions. To be completed in 8 months from PMO establishment.

Objective and Time Frame
I. Government Integrated Financial Management Information System (GIFMIS) GIFMIS TRACK 2 Objective and Time Frame To support fundamental reforms of PFM business processes, reassignments of roles and responsibilities over financial transaction processing, oversight and reporting, and corresponding organization structural changes. To be done in 5 years. GIFMIS Track 2 Objective and Time Frame are as follows: To support fundamental reforms of PFM business processes, reassignments of roles and responsibilities over financial transaction processing, oversight and reporting, and corresponding organization structural changes. To be done in 5 years.

On Reforms…, Reforms are not a monopoly of DBM being an oversight agency, but other departments as well. All Departments must focus on the Key Result Areas of the President’s Social Contract with the Filipino people under EO 43 as earlier stated as further enunciated in the Philippine Development Plan.

“Only accountants can save the world
“Only accountants can save the world! --- through peace, goodwill and reconciliation” With that let me end my presentation with this quotation. “Only accountants can save the world! --- through peace, goodwill and reconciliation”

Thank you for your kind attention
Department of Budget and Management 3rd Flr., Boncodin Hall, General Solano St. San Miguel, Manila 1005 Philippines 46

Updates on DBM Regulations

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