Question & AnswerQ&A (EXECUTIVE ORDER NO. 91)
The Cash Budgeting System (CBS) is a government budgeting approach adopted effective January 1, 2019, where appropriations are available for obligation and disbursement only within the fiscal year, with obligations implemented and corresponding goods and services delivered within the same fiscal year, and payments made within an extended payment period.
Appropriations become unavailable for obligation and disbursement after the end of the fiscal year for which they were authorized, except for financial subsidies to local government units (LGUs) which are available until the end of the succeeding fiscal year, and statutory shares of LGUs which are available until fully expended.
The Extended Payment Period (EPP) is the period during which payments for obligations incurred within the fiscal year can be made. It generally lasts for three months after the end of the validity of appropriations unless otherwise determined by the Department of Budget and Management (DBM).
Unreleased appropriations and unobligated allotments at the end of the fiscal year revert to the National Treasury and are no longer available for expenditure except through subsequent legislative enactment.
Multi-year projects require a Multi-Year Contractual Authority (MYCA) issued by the DBM before procurement. The MYCA covers the full project cost and serves as the basis for the approved budget for the contract. It may also be issued for certain single-year projects that inherently span multiple fiscal years.
Early Procurement Activities are procurement processes undertaken short of contract award for goods, infrastructure projects, and consulting services planned for the following fiscal year, starting from posting of procurement opportunities to recommendation for contract award, pending approval of the General Appropriations Act.
Financial subsidies to LGUs are available for obligation and disbursement until the end of the succeeding fiscal year, after which any unspent funds must revert to the National Treasury.
For 2019, appropriations for infrastructure capital outlays are valid until December 31, 2019, but construction completion, inspection, and payment must be done by December 31, 2020. Appropriations for maintenance, other operating expenses, and capital outlays are valid until December 31, 2019, with delivery, inspection, and payment by June 30, 2020.
The adoption is supported by Article VI, Section 25(1) which mandates how the budget shall be prepared, and Article VII, Section 17, which grants the President control over all executive departments, bureaus, and offices.
Unpaid obligations and undisbursed funds at the end of the Extended Payment Period revert to the National Treasury and cannot be spent unless authorized by a subsequent legislative enactment.