QuestionsQuestions (DBM NATIONAL BUDGET CIRCULAR NO. 440)
It establishes the Simplified Fund Release System (SFRS) in the national government and sets guidelines for its implementation under Section 56 of the FY 1995 GAA (RA 7845) and related provisions of the Administrative Code (E.O. 292), aiming to simplify procedures for releasing appropriated funds while ensuring judicious use and accelerating implementation of programs/projects.
All government agencies, including GOCCs and LGUs, receiving national budgetary support through Advices of Allotment (AAs) issued by DBM under the GAA or other valid appropriations measures.
It was established starting January 1, 1995. AA releases to authorized agencies to incur obligations were discontinued and replaced by allotment release orders (GARO/SARO).
The agency budget matrix (ABM) disaggregating agency budgets into eight categories; the allotment release order (GARO or SARO) notifying agencies of authorized allotments and conditions; and the allotment release program prescribing prioritization guidelines for releases.
Because releases are principally made according to specific government policy initiatives and development priorities, not primarily based on individual agency requests; this standardizes releases among similar agencies and reduces paperwork.
It is a disaggregation tool that organizes an agency’s programmed appropriations into categories (by agency, locality, program/activity/project, source of appropriation, fund, allotment class/object of expenditure, need for clearance, and specificity of appropriation), which then determines release timing/magnitude under the SFRS.
By (1) agency; (2) locality; (3) program/activity/project; (4) source of appropriation; (5) fund; (6) allotment class/object of expenditure; (7) need for clearance; and (8) specificity of appropriation.
Into major groups: General administration and support services; Support to operations; Operations; Locally-funded projects; and Foreign-Assisted projects.
GARO is a comprehensive authority issued to all agencies for obligations not exceeding an authorized amount for a specified period for common expenditures not requiring special clearance. SARO is a specific authority issued to identified agencies for obligations not exceeding an authorized amount for a specified period for expenditures subject to special laws/regulations or separate approval/clearance.
Examples include lump-sum appropriations under Special Purpose Funds (except IRA), lump-sum within agency appropriations subject to special budgets (e.g., compensation lump-sum, grants/subsidies/contributions, unallocated infrastructure), new projects (local or foreign-assisted) and proposed extensions, agency/congressional initiatives not previously submitted in the President’s budget proposal, intelligence/confidential funds, acquisition of motor vehicles/computers/communications/firearms, science and technology research, certain mandatory retirement/life/insurance/health/HDMF premiums, automatically appropriated expenditures (special accounts), continuing appropriations/unreleased prior-year valid appropriations, and other items later determined by DBM.
Those not covered by SARO shall be released through a GARO.
Agencies may use allotment savings through augmentation in accordance with specified provisions of the 1995 GAA (RA 7845) and related general provisions, provided the use is within the same program/project, allotment class, and total object of expenditure appearing in the GAA.
Except for agencies enjoying fiscal autonomy, using savings outside the restrictions in the augmentation rule (i.e., outside same program/project, allotment class, and total object) requires prior approval by DBM.
Yes. Upon receipt of a copy of the GARO/SARO, agencies may enter into contracts or bind the government into an obligation to pay a certain sum, consistent with existing accounting rules and regulations.
They remain valid up to the end of the budget year; however, GAROs/SAROs covering all allotments for capital outlays or items treated as continuing appropriations remain valid up to the end of the immediately succeeding year.
Appropriations specifically earmarked for regional/operating units are deemed directly releases to those units upon issuance of the GARO/SARO (per RA 7845 Section 59 or GAA provisions). Agencies may issue internal guidelines to monitor and control use. If lump-sum appropriations are released to Central Office but intended for regional units, the existing sub-allotment system by Central Office continues.
GAROs and SAROs are accountable forms; amounts must be recorded in agency books similarly to the prior AA system (unless modified by COA). Actual payment of obligations incurred follows the Modified Disbursement System as amended by National Budget Circular No. 437.