Definitions
- "Government" includes national branches, local governments, and GOCCs.
- GOCCs are corporations owned or controlled by the government, performing proprietary or governmental functions, excluding state universities and colleges.
- Subsidiary corporations serve to support parent GOCCs.
- Various financial and budgetary terms are defined, including appropriations, allotments, obligations, current operating expenditures, capital outlays, subsidies, equity, internally generated funds, external funds, and financial institutions.
Fiscal Year and Budget Calendar
- Fiscal year for all GOCCs is January 1 to December 31.
- GOCC budgets must be consistent in format and timing with the National Government budget, but may be adapted for particular corporate needs.
Preparation and Approval of Operating Budgets
- Each GOCC must prepare an operating budget including revenue, expenditure, and borrowing estimates.
- Expenditure estimates cover both current and capital expenditures.
- Budgets must be prepared before the fiscal year and approved by the corporation's Governing Board and the President/Prime Minister.
Financial Projections
- Operating budgets must be accompanied by projected financial statements including balance sheet, profit and loss, cash flow, and other relevant financial data.
- Required to include assessments of economic and business conditions affecting the corporation.
- Financial institutions submit additional reports on sources and uses of funds for the budget year, current year, and preceding year.
Budget Review for Financial Institutions
- Financial institutions' budgets are subject to the same review process, except certain rediscounting, lending, and borrowing transactions are excluded.
- Capital outlays include permanent investments such as equity in subsidiaries, land, and buildings.
- Special treatment for loans that affect staff benefits or capital projects, which are included in the budget.
Long-Term Budgeting
- GOCC boards must prepare a five-year budget plan including income, expenditures, debt, and capital project costs.
Budget Flexibility and Amendments
- Supplemental budgets require adequate funding and follow the same approval procedures.
- The President/Prime Minister may approve flexible budgeting systems or delegate budget reallocation authority to Governing Boards.
- Any changes to approved budgets must have Presidential/Prime Ministerial approval, except as allowed under flexible budgeting.
Expenditure and Organization Controls
- Budgets must specify expenditures by object and include organizational charts and personnel details.
- Creation or reclassification of positions and reorganizations require Governing Board approval and must comply with compensation laws.
Donations and Trust Funds
- GOCCs may grant donations only if operating revenues net of expenses cover such grants.
- Budget estimates must cover trust fund income and expenses, but trust fund principal transactions are excluded from operating budgets.
Budget Execution Authority
- No GOCC may incur obligations or make payments for expenses without an approved budget prospectively for the calendar year.
Subsidiaries and Affiliates
- Operating budgets of subsidiaries and affiliates must accompany parent GOCC budgets, except for certain financial institution subsidiaries classified as acquired assets.
Dividend Policy
- Corporations must declare at least 5% of net earnings as cash dividends to the government, subject to Presidential modification.
- Exceptions apply to certain social institutions and corporations with specific charter provisions.
Accounting Procedures
- Budgets and accounting follow obligational authority or cash budget concepts as prescribed.
Compensation Policies
- Salaries, wages, allowances, fees, and other compensation follow classification and compensation laws.
- Fringe benefits are subject to guidelines approved by the President/Prime Minister.
Allowances for Detailed Officials
- Officials/employees detailed between parent and subsidiary corporations receive allowances only as approved under compensation laws.
Equity Investment and Budget Requests
- GOCCs may submit capital stock subscription requests for government funding as part of the General Appropriations Bill process.
- Equity investments must not exceed authorized capital stock and require accompanying financial projections and project details.
Release of Funds
- Appropriated funds for equity investments and subsidies are released upon submission of Special Budgets.
- Usage of funds must be specified clearly.
Accountability and Reporting
- Minister of the Budget compiles and submits summaries of approved GOCC budgets annually to the Batasang Pambansa.
- GOCCs must submit annual financial performance reports comparing results to the approved budget, including solvency and project status.
- Reports also required from subsidiaries and affiliates.
- Obligations backed by government guarantees must be periodically reported to finance and budget ministers.
Implementation and Enforcement
- Rules and regulations for implementation shall be issued by the Minister of the Budget.
- GOCC Boards and government representatives are mandated to take necessary actions to comply.
- The Order takes effect upon approval with transitional provisions for the 1979 budget year.