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Capacity Building for Local Treasurers on the Statement of
Receipts and Expenditures System Decentralization and Local
Government (DIALOG) Trust Fund
Summary Report – Capacity Building Program for Local
Treasurers
I. Introduction
A. Background In 2008, the Bureau of Local Government Finance
(BLGF) completed substantial technical reforms to the Statement of
Income and Expenses (SIE) system, which had been the standard
financial performance reporting system for local government units
(LGUs) since its launch in 2001. Supported by technical assistance
from the Asian Development Bank (ADB), the revised Statement of
Receipts and Expenditures (SRE) system was designed to harmonize
with the Commission on Audit-New Government Accounting System
(COA-NGAS) accounts and to incorporate additional data requirements
to evaluate the fiscal capacity, level of debt, borrowing capacity,
creditworthiness and overall financial performance of each LGU.
BLGF circulated a new SRE manual in 2009 to guide the local
treasurers in implementing the new reporting system. Beginning in
2009, the reports produced by the LGUs reflected the new SRE
reporting format. The SRE generally conforms to the International
Financial Reporting Standards (IFRS). It reports current year
expenditures of the LGUs from both current and continuing
appropriations, and provides specific data on the level of local
capital outlays. More importantly, the system allows the BLGF to
review the flows of funds and fund balances of the LGUs,
facilitating improved monitoring of the performance of local
treasurers. With the goal of harmonizing charts of accounts across
local government fiscal reports, the new system now requires local
treasurers to utilize data from documents and forms prepared by
other local fiscal officer, particularly the local accountants and
budget officers. Recent changes made by COA to its charts of
accounts have led to difficulties for local treasurers in
accurately reconciling the SRE reports with the trial balances of
the local accountants. Discrepancies have been noted between the
SRE and the COA-NGAS accounts in terms of grouping, classification,
and treatment of certain accounts, timing of recording
transactions, and the use of terminologies. The new system also
requires local treasurers to maintain comprehensive SRE databases
for their respective LGUs, which is something that the previous
system did not require. Hence, for the SRE System to produce
consistent, accurate, and timely LGU financial reports, technical
assistance is needed to strengthen the capacities of local
treasurers to fully adopt the new requirements and processes. In
response to this need, BLGF developed a capacity building program
to support improvements to the accuracy, consistency, and
timeliness of sub-national fiscal data reporting by: a)
strengthening the capacities of local treasurers to adopt the
requirements of the new SRE System; and b) strengthening the
capacities of the BLGF central and regional offices to effectively
provide correct and timely guidance to local treasurers in
implementing the SRE system.
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In support of BLGF’s efforts to improve sub-national financial
reporting, the Decentralization and Local Government (DIALOG) Trust
Fund implemented the Capacity Building of Local Treasurers on the
SRE System project on March to July 2012 to assist BLGF in
implementing a comprehensive capacity building program through the
following: 1. Production of Training Manuals and References – This
included the reproduction of the
SRE manual entry guide and training guidelines for distribution
to local treasurers and BLGF central and regional offices.
2. Capacity Building of BLGF Staff – This included the
implementation of capacity building workshops for central and
regional office staff to: a) provide guidance to local treasurers
on the completion of the SRE reports; and b) monitor the compliance
of local treasurers in the implementation of the new SRE
system.
3. Capacity Building of Local Treasurers – This included the
implementation of capacity building workshops for local treasurers
from provinces and cities on the preparation of the quarterly SRE
reports. Importantly, officers from LGU accounting and budgeting
offices were included as participants in the workshops to ensure
the harmonized adoption of the new SRE reports across the fiscal
offices of the LGUs.
The support given to the BLGF under this component extended to
the local fiscal officers of provincial and city LGUs. BLGF has
committed to cascade the training to the remaining municipal
treasurers by leveraging on the trained regional BLGF staff,
provincial treasurers, and city treasurers.
B. Development Partner Support The DIALOG Trust Fund is a World
Bank-managed trust fund that was established in January 2010 to
serve as a catalyst for furthering reforms under the Philippine
Development Forum, Working Group on Decentralization and Local
Government (PDF-WG). The DIALOG Trust Fund provides a mechanism for
pooling resources from various development partners to support the
implementation of the work-plan of the PDF-WG. The trust fund has
been funded with initial contributions from the Australian Agency
for International Development (AusAID) and the Canadian
International Development Agency (CIDA). This Capacity Building of
Local Treasurers on the SRE System is strongly consistent with the
first development objective of the DIALOG Trust Fund, namely, to
“Accelerate decentralization and local governance reforms in
strengthening local public finance and management, improving
overall LGU performance, and strengthening the legal and
institutional environment for local governance; through capacity
development and analytical activities.” The project seeks to
support important reforms in local government fiscal reporting that
are expected to strengthen: a) the institutional environment for
LGU accountability through an improved monitoring system for LGU
revenues and expenditures; and b) the capacity for LGUs to more
effectively manage public finances. This project further supports
the second development objective of the trust fund, that is, to
“Intensify government and development partner support for
decentralization and local governance reforms, through improved
coordination and harmonization of resources and
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systems” by building on technical reforms already undertaken by
the BLGF with the technical assistance of ADB and by following
through with the comprehensive roll-out of the new SRE System.
II. Summary of Capacity Building Program Implementation
A. Workshop Goals While the SRE system was designed to conform
to the financial statements prepared under the NGAS, the revised
SRE reporting format includes new account titles that have no
equivalent accounts in NGAS. The inclusion of these new account
titles was necessary in order to provide additional information and
to establish financial indicators for economic forecasts, to
evaluate the LGUs’ operating performance, and to respond to other
needs and demands of the various users and stakeholders of the SRE
report. Some of the SRE account titles were also modified to allow
for accurate description of the transactions.1 Likewise, the
preparation and presentation of SRE reports were designed to
conform to the principles of the IFRS and the Philippine Financial
Reporting Standards (PFRS). The SRE is widely used by various
government offices to evaluate and monitor LGU financial
performance, as the basis for LGU loan and grant applications, for
statistical analysis, and for the analysis of revenue collections
and borrowings vital in decision making processes. The SRE is also
used by the Senate and Congress for legislation, by private
financial institutions for credit application, and by development
partners. With the goal of harmonizing charts of accounts across
local government fiscal reports, the capacity building workshops
were designed to train a team of local government treasurers,
accountants, and budget officers to understand the different
reports required and the accounts and terminologies used in the
process of reconciling the SRE accounts with the COA-NGAS accounts.
The workshops sought to promote uniformity in accomplishing the SRE
reports among LGUs as well as to improve the quality of the SRE
report in terms of efficiency and timeliness of submission.2
B. Workshop Coverage and Participants
The capacity building program targeted the local treasurers,
accountants, and budget officers for all the cities and provinces
of the country as the participants for the workshops. A total of
nine regional workshops were organized, clustering between eight
and 22 cities and provinces per workshop. Consequently, BLGF will
cascade the training to the remaining municipal treasurers,
accountants and budget officers, taking advantage of the trained
regional BLGF staff and provincial and city treasurers,
accountants, and budget officers.
1 Specifically, the following are the items included in the new
SRE format: a) collection for advance
payment of real property tax; b) supplemental budgets approved
by the Sanggunian Bayan during the year; c) other non-income
receipts; d) other non-operating expenditures; and e) payments for
expenditures arising from continuing appropriations. 2 As directed
by Sections 352 and 315 of the Local Government Code, the SRE
should be posted within 30
days from the end of each fiscal year and the submission of
detailed SREs should be on or before the 15th
day of July of each year.
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Appendix 1 provides the composition of BLGF staff for each of
the nine workshops. BLGF’s detailed plan for cascading the training
to the remaining municipal treasurers, accountants, and budget
officers can be found in Appendix 2.
C. Workshop Design
The three-day workshop program was focused on harmonizing the
SRE accounts of the local treasurer with the COA-NGAS accounts of
the local accountant and the accounts of the local budget officer.
The training also emphasized the importance of quality and timely
submissions of the SRE. The first day of each workshop was spent
discussing an overview of the SRE, the changes it has undergone,
its present characteristics, and its possible uses for the public
sector as well as for the private sector and development partners.
On the second and third days of the workshop, the participants were
coached on the process of reconciling the latest SRE account of the
local treasurer with the COA-NGAS account of the local accountant.
Each workshop culminated in the practical application of the
training wherein local treasurers were tasked to prepare harmonized
SRE reports that reconcile the SRE accounts with those of the local
accountant’s COA-NGAS accounts. The local treasurers were asked to
present their workshop outputs to their fellow participants and
both the workshop facilitators and other participants were invited
to provide feedback. A sample copy of the three-day program can be
found in the Appendix 4. Appendix 5 contains all the presentations
and training materials utilized during the workshops.
D. Summary of Workshop Implementation
The first of the nine workshops was held from March 20 to 22,
2012, at the Graceland Estate and Country Club in Tayabas, Quezon,
while the last of the workshops was held from July 10 to 12, 2012,
at the Oasis Hotel in Clark, Pampanga. The list of workshop
clusters, locations, implementation dates, and the number of LGUs
follows below.
Workshop Clusters Locations Dates Target Number of LGUs
Provinces Cities
Cluster 1: Regions I & CAR Baguio City (Hotel Supreme) June
26-28 10 11
Cluster 2: Regions II & III Manila (Bayview Hotel) June
13-15 12 16
Cluster 3: Regions IV-A & IV-B Tayabas, Quezon
(Graceland
Estates and Country Club) March 20-22 10 16
Cluster 4: Regions V & VIII Manila (Bayview Park Hotel) June
5-7 12 14
Cluster 5: Region VI Manila (Bayview Park Hotel) May 22-24 6
16
Cluster 6: Region VII Cebu City (Cebu Grand Hotel) May 9-11 4
16
Cluster 7: Regions IX, X & CARAGA
Cebu City (Cebu Grand Hotel) May 8-10 16 21
Cluster 8: Regions XI & XII Davao City (Apo View Hotel)
April 24-26 10 12
Cluster 9: NCR Clark, Pampanga (Oasis Hotel) July 10-12 0 16
TOTAL 80 138
Of the 138 cities and 80 provinces in the country, all but two
cities (Laoag City and Vigan City) and three provinces (Batanes,
Siquijor, and Sultan Kudarat) sent representatives to the workshop.
Given the target participants composed of local treasurers,
accountants, and budget officers, the capacity building program
expected 645 participants in total (net of the
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five LGUs that were unable to send participants). However, only
459 of the targeted participants were eventually able to attend,
representing an attendance rate of 71.5 percent. The workshops were
also attended by an additional 643 participants, the majority of
whom were deputy officers and staff of the LGU fiscal offices.
These additional participants also included 15 provincial
governors, vice governors, and governors-in-charge, as well as 22
city mayors and vice mayors.3 The following table provides a
summary of the participants from each region.
Region
Number of LGUs Expected Target
Participants
Actual Target Participants
Number of Additional
Participants Province City TOTAL
I 4 7 11 33 26 57
II 4 3 7 24 21 29
III 7 13 20 60 49 75
IV - A 5 14 19 57 21 58
IV - B 5 2 7 21 7 35
V 6 7 13 39 11 57
VI 6 16 22 66 54 73
VII 3 16 19 57 51 27
VIII 6 7 13 39 17 47
IX 6 6 12 36 26 18
X 5 9 14 42 41 21
XI 4 6 10 30 23 10
XII 5 6 11 33 26 20
CAR 6 2 8 24 24 33
CARAGA 5 6 11 33 25 22
NCR 174 17 51 37 61
TOTAL 77 137 214 642 459 643
The ratio of actual local treasurers, accountants and budget
officers to the expected number of target participants was lowest
for Region 5, where the actual number of participants was just 11
compared to the 39 expected target participants, yielding a ratio
of 28 percent. This was followed closely by Regions IV-B and IV-A
with attendance percentages of 33 percent and 37 percent,
respectively. On the other hand, CARAGA had a perfect attendance
and this was closely followed by Region X, with a 98 percent
attendance of local treasurers, accountants, and budget officers.
Please refer to Appendix 3 for a more detailed consolidated list of
participants.
E. Summary of Workshop Outputs
Of the 214 LGUs that participated in the capacity building
workshop, only 97 LGUs were able to successfully reconcile the SRE
accounts with the COA-NGAS accounts, representing a success rate of
just 45.3 percent. The shares of LGUs that were able to
successfully reconcile the accounts ranged from a low of 29.4
percent for the NCR cluster to a high of 68.4 percent for the
Region I and CAR cluster. The table below provides a summary of
the
3 The project funded the attendance of the local treasurers,
accountants, and budget officers for the
entire three-day workshop along with the attendance of
provincial and city local executives. Additional participants from
the LGU fiscal offices were funded by the LGUs. 4 The municipality
of Pateros was included in the workshop for NCR LGUs.
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performance of the local treasurers in successfully preparing
the final outputs for the workshops.
Workshop Clusters Number of
LGUs
Number of LGUs able to correctly
reconcile accounts
Percentage of LGUs able to correctly
reconcile accounts
Cluster 1: Regions I & CAR
19 13 68.4%
Cluster 2: Regions II & III 27 9 33.3%
Cluster 3: Regions IV-A & IV-B
26 12 46.2%
Cluster 4: Regions V & VIII 26 16 61.5%
Cluster 5: Region VI 22 8 36.4%
Cluster 6: Region VII 19 7 36.8%
Cluster 7: Regions IX, X & CARAGA
37 13 35.1%
Cluster 8: Regions XI & XII 21 14 66.7%
Cluster 9: NCR 17 5 29.4%
TOTAL 214 97 45.3%
Many of the reconciling problems stemmed from differences in the
treatment of accounts. It became clear to the local treasurers
after undertaking the exercise, especially those who recently took
on their positions, that SREs were cash-based accounts and, as
such, could vary greatly from the accounts of the local
accountants. Common reconciling items between the SRE accounts and
the COA-NGAS accounts were depreciation, bank credit without
receipt, bank charges, bank interest, real property tax collection
differences due to time period treatment, and inventory
adjustments. For a more detailed list of workshop outputs, please
see Appendix 8.
F. Summary of Workshop Evaluation
BLGF administered evaluation forms for the participants at the
end of each workshop. The table below shows a perfect submission
rate for all clusters except for Clusters 5, 6, and 7.
Workshop Clusters Number of
Participants Given Evaluation Forms
Number of Evaluation Forms
Submitted
Submission Percentage
Cluster 1: Regions I & CAR 105 105 100.0%
Cluster 2: Regions II & III 96 96 100.0%
Cluster 3: Regions IV-A & IV-B
78 78 100.0%
Cluster 4: Regions V & VIII 105 105 100.0%
Cluster 5: Region VI 66 54 81.8%
Cluster 6: Region VII 60 48 80.0%
Cluster 7: Regions IX, X & CARAGA
111 108 97.3%
Cluster 8: Regions XI & XII 66 66 100.0%
Cluster 9: NCR 87 87 100.0%
TOTAL 774 747 96.5%
Overall, the participants gave good evaluations for the
workshop, with the evaluations averaging 8.78 on a 10-point scale.
The four main aspects of the workshop – Facilitation, Course
Design, Program Coordination, and Training Materials – received
uniformly high ratings, with Facilitation receiving the highest
average rating of 8.86. A summary of the
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evaluation forms can be found below. Appendix 6 contains a more
detailed report on each workshop cluster while a copy of the
evaluation form can be found in Appendix 7.
POINTS TO RATE AVERAGE
FACILITATION:
1. The lecturer/facilitator was well-prepared and displayed
mastery of the subject matter 8.89
2. The lecturer/facilitator effectively motivated our group’s
8.87
3. The lecturer/facilitator communicated effectively with us
8.88
4. The lecturer/facilitator effectively used the training
8.81
5. Efforts were made to relate the subject/topic to real life
situations 8.84
FACILITATION AVERAGE 8.86
COURSE DESIGN:
1. The program’s objective were clearly stated and easy to
understand 8.81
2. The topics were complete, relevant and applicable to my
specific needs 8.78
3. The sequencing of the topics displayed good flow, logic and
organization 8.75
4. The methodologies used enhanced my understanding of the
subject matter 8.78
5. The time allotted for each module was appropriate 8.77
COURSE DESIGN AVERAGE 8.78
PROGRAM COORDINATION:
1. Prior to my attendance, I was fully informed of the program’s
schedule, venue, objective, description and requirements 8.77
2. The house rules given clarified our expectations regarding
the conduct of the program 8.82
3. Extra effort was exerted to satisfy the special request of
our group’s members. 8.72
4. The venue was conducive and appropriate to the methodologies
used 8.79
5. Efforts were made to determine the effectiveness of the
program and its applicability to my work 8.91
PROGRAM COORDINATION AVERAGE 8.80
TRAINING MATERIALS:
1. All training materials satisfactorily addressed the program’s
objectives 8.71
2. All training materials were properly prepared, well-organized
and user-friendly 8.70
3. The contents of all training materials were up-to-date,
accurate and error-free 8.61
4. All needed training materials were complete and issued on
time 8.74
5. The design used for hand-outs or manuals looked professional,
and their materials were of high quality 8.71
TRAINING MATERIALS AVERAGE 8.69
OVERALL AVERAGE 8.78
The high ratings from the evaluation forms were reinforced by
the qualitative feedback from the participants, which supported
these results. Comments included the following: “articulate and
effective resource speakers and facilitators,” “resource materials
are timely and complete,” and “course design is clear and
understandable.” Participants agreed that the workshop was very
timely given the practical experiences of the participants in
encountering differences in the treatment of accounts by the
treasury and the accounting offices.
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In terms of areas for improvement, activity reports indicated
that the participants commented on the need to provide hard copies
of the forms used for reconciliation. The participants also felt
that the facilitators should find better ways to motivate them to
improve their reconciliation output instead of relying on the
non-credible threat of not letting them go home from the
workshop.
III. Lessons from Capacity Building Program
A. Quality Reporting
Most of the SREs presented by the workshop participants were
rejected, and returned to them for correction and resubmission.
This was a necessary learning experience as the workshop helped the
budget officers and accountants understand the importance of the
SRE, what it was about, and what the treasurers needed from them to
be able to submit quality and timely SREs. Treasurers also
understood the need for continuity. With the present turnover rate,
the treasurers felt the need to make sure that what they learned
from workshops such as these was passed on to their successors.
This highlighted the need for a clear and systematic transfer of
knowledge and information from one generation of treasurers to the
next. There was also a need for treasurers to be well trained and
knowledgeable of the definitions and the nuances of the SRE
accounts. The workshops also raised an important question regarding
the technical skills of treasurers – whether or not the treasurers
possessed the technical skills needed to efficiently and
effectively implement the new SRE system.
B. Checks and Balances
According to the SRE Manual prepared by the BLGF, SRE reports
done by LGU treasurers are checked and verified twice – first by
the BLGF regional office and second by the BLGF central office. If
either office discovers an error or a discrepancy in the report,
the report is sent back to the LGU for revision. Below is a
flowchart that indicates how the SRE is prepared.
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In many LGUs, treasurers made use of encoders in the preparation
and submission of their SRE reports. The problem with this system
of relying on encoders was that it lacked the proper checks and
balances. This problem extended to the provincial levels where
reports were automatically submitted once received, again without
the proper checks and balances. According to the BLGF manual, SRE
reports are supposed to be verified by the BLGF regional offices
and approved by the BLGF central office. If reports are rejected
either by the BLGF regional office or the BLGF central office,
reports are sent back to the LGU for revision. However, not all
reports are checked. As a result of the sheer number of reports
submitted,
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the BLGF central office randomly draws SREs for checking. In the
future, LGUs that habitually submit incorrect or inaccurate SREs
will be asked to submit a reconciliation output.
C. Coordinated Effort A coordinated effort is needed among the
treasurers, accountants and budget officers. There appeared to be a
lack of clear and effective coordination, which affected the
accurate preparation of SREs. One important effect of the workshop
is that it has successfully fulfilled the need to inform the
accountants and the budget officers about the requirements of the
treasurers in the creation and submission of their SREs. For the
treasurers, the workshop has impressed upon them the importance and
urgency of their SRE reports. Overall, by bringing together the
treasurers, accountants and budget officers, the workshop was able
to make that crucial step to bringing about an awareness of the
necessity of closer collaboration and coordination among them.
IV. Recommendations
A. Proper Checks and Balances One method to check the accuracy
of the treasurers’ report is to recommend an annual use of the
Statement of SRE reconciliation for all LGUs. As suggested by the
BLGF, LGUs that habitually submit inaccurate SRE reports will be
asked to submit the Statement of SRE reconciliation. This will
serve the twin purpose of: (1) ensuring that the treasurers’
accounts are correct, while (2) providing an incentive for accurate
reporting.
B. Seal of Good Housekeeping Another incentive for quality and
timely submission of the SRE reports is the Seal of Good
Housekeeping (SGH), an award given by the Department of Interior
and Local Government (DILG) to deserving local government units
that get high scores on planning, budgeting, revenue mobilization,
and financial management, among other categories. One of the
requirements for the award of the Seal of Good Housekeeping is the
accurate and timely submission of the SRE reports. However, when
the DILG validates the requirements for SGH, the validation is done
at the LGU level and not with BLGF. This may lead to misinformation
regarding the actual submission of the SRE reports. There can be
instances when the LGU presents an SRE report to the DILG, which,
in fact, has not yet been submitted to the DILG. Hence, there is a
need for more stringent qualifications for the awarding of the SGH.
To date 110 out of 138 cities and 70 out of 81 provinces have been
awarded the SGH.
C. Future Training Another important step is the cascading of
the capacity building to municipal treasurers, accountants and
budget officers not covered by the capacity building workshops. The
support to BLGF only extends to the capacity building of provincial
and city treasurers. BLGF will cascade the training to the
remaining municipal treasurers by taking advantage of the trained
regional BLGF staff and the provincial and city treasurers,
accounts and budget officers. BLGF’s detailed plan on how to
cascade the training to the remaining municipal treasurers,
accountants and budget officers can also be found in the
appendix.
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D. Continuity
It is imperative to create a system of continuity in the
treasury department. Outgoing treasurers should not be cleared
until all materials from all workshops attended have been handed
over and properly explained to their successors. The workshop has
brought to light actual examples of treasurers who were not aware
that an SRE manual existed. This may have resulted from a lack of
continuity of information and knowledge from one generation of
treasurers to the next. The importance of a system of continuity
will be further highlighted when the soon-to-be-rolled-out enhanced
eSRE system is implemented.
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List of Appendices
Appendix 1 – Composition List of BLGF Staff Appendix 2 – Memo to
All Regional Directors Regarding the Capacity Building of BLGF
Regional Offices to Municipalities Appendix 3 – Detailed
Consolidated List of Participants Appendix 4 – Workshop Program
Appendix 5 – Training Materials Appendix 6 – Detailed Evaluation
Report Appendix 7 – Evaluation Form
Appendix 8 – Workshop Outputs