Philippines 2025

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The aggregate expenditure outturn was between 85% and 115% of the approved aggregate budgeted expenditure in two of the last 3 years (2022 and 2023)

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The variance in the composition of expenditure by administrative classification was more than 15% in each of the last 3 years

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Variance in expenditure composition by economic classification was less than 10% over the last 3 years

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Actual expenditure charged to a contingency vote was on average less than 3% of the original budget (0.5%)

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Actual revenue was between 97% and 106% of budgeted revenue in all last three years

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The variance in revenue composition was less than 10% in two of the last three years (2021 and 2022)

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Budget formulation, execution, and reporting are based on administrative and economic classification using GFS standards or a classification that produces consistent documentation comparable to those standards

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The 2024 budget documentation fulfilled all information benchmarks.

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Off-budget expenditure was between 1% and 5% of total expenditure in 2023. These operations are reported as notes in annual financial reports

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Off-budget revenue was between 1% and 5% of total expenditure in 2023 but these operations are reported in annual financial reports

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The Philippines has no extra-budgetary entities that are the subject of this assessment

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All transfers to the LGUs are based on clearly defined set of rules and procedures

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The DBM ensures timely allocations and transfers to local government units (LGUs) through strict adherence to its process flow.LGUs received initial notifications of their 2024 budget allocations in June 2023, with subsequent adjustments communicated in December 2023

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Information is published annually on policy or program objectives, key performance indicators, outputs to be produced, and the outcomes planned for most ministries, disaggregated by program or function.

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Information is published annually on the quantity of outputs produced and outcomes achieved for most ministries disaggregated by program or function.

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Information on resources received by frontline service delivery units was collected and recorded for at least the Department of Education (DepEd) and the Department of Health (DoH) during the last 3 FY. A report compiling the information is prepared annually by Commission on Audit (COA).

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Independent evaluations of the efficiency and effectiveness of service delivery have been carried out by COA and published yearly since 2017.

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The government makes available to the public eight elements, including all five basic elements, in accordance with the specified time frames

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Audited annual financial statements for most Government-Owned and Controlled Corporations (GOCCs) are submitted to Government within six months of the year-end, but publication occurs only within nine months of the year-end. A consolidated report on the financial performance of all GOCCs is published annually

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Unaudited reports on the financial position and performance of the majority of local government units (LGUs) are published at least annually within nine months of the end of the fiscal year. Consolidated audit reports covering majority of LGUs are typically published by Commission on Audit (COA) in Q4 of the following year

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The Philippines' Department of Budget and Management has implemented systems to improve budget report accuracy, but not all agencies have fully adopted them, and manual processes remain in use.

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Economic analyses are conducted as part of the Investment Coordination Committee’s appraisal of major capital projects butthe results are not made publicly available

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All major investment projects are prioritized on the basis of published standard criteria for project selection

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Financial information for all major investment projects over a 6-year period is published on the Department of Economy,Planning, and Development’s (DepDev) website; however, this information does not present a year-by-year breakdown of the capital costs and estimates of the recurrent costs

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The total cost and physical progress of major investment projects are monitored by the respective implementing agencies and DepDev. Standard procedures and rules for project implementation are in place, and information on the implementation of major investment projects is published annually across different sources.

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The Bureau of the Treasury (BTr) maintains records of its financial assets recognized at acquisition cost and fair value, and publishes annual reports on financial performance, but there are persistent issues in accounting flagged by the Commission on Audit (COA) that has resulted in misstatements in some assets.

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The government has taken significant steps to institutionalize more systematic asset management through several policy issuances and the roll-out of the National Asset Registry System (NARS); however, NARS was only rolled out for key national government agencies(NGAs), and not fully rolled out. Information published does not include information on age.

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There are clearly established rules and procedures for the disposal of nonfinancial assets. Documentation reports containing pertinent information are required prior to the disposal of assets and information required to be published for disposal of assets through public auction

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The reconciliation of debt data is done monthly, quarterly, and annually since the Bureau of the Treasury(BTr) produces statistical reports on debt service, debt stock, and debt-related transactions. Statistical reports are uploaded and made available publicly on the website of the BTr.

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The National Government is authorized to borrow through the Department of Finance (DOF) and the BTrand are likewise the responsible entities for debt management

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The current debt strategy of the BTr does not meet the PEFA requirements for a medium-term debt strategy

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Macroeconomic forecasts are included in theBudget of Expenditures and Sources of Financing (BESF) (Table A.1), covering th budget year and the two following fiscal years. The Development Budget Coordination Committee (DBCC)reviewed and approved them

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The BESF (Table A.2) includes forecasts of the main fiscal indicators, including revenues (by type – Table C.1 & C.3),aggregate expenditure, and the budget balance, for the budget year and two following fiscal years. The underlying assumptions behind these forecasts are included within the technical notes to the budget. The BESF is submitted to the legislature.

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The BESF (Table A.6) presents fiscal scenarios for the budget year based on alternative macroeconomic parameters.

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The government prepares estimates of the fiscal impact of all proposed changes in revenue and expenditure policy for the budget year and the two following years. The revenue estimates are presented in the Budget of Expenditures and Sources of Financing (BESF) (Table C.5) which is submitted to legislature; the impact of expenditure policy changes is presented within the budget documentation for the current budget year only.

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The Government’s fiscal strategy is guided by the Philippine Development Plan (PDP) 2023-2028 and the Medium-Term Fiscal Framework (MTFF) 2022-2028; both detail time-bound quantitative fiscal targets over the medium term. Both documents have been submitted to the legislature and are publicly available online.

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The DBCC publishes a mid-year and year end report on Government’s progress of its fiscal strategy; these reports are not submitted to the legislature.

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The annual budget document presents estimates of expenditure by administrative, economic and program classification for the budget year only. Medium-term expenditure estimates are presented at the aggregate level only.

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Aggregate expenditure ceilings for the budget year and the two following fiscal years are approved by the DBM prior to issuance to agencies. Forward Estimates (FEs) for Tier 1 by administrative and economic classification are approved by the government before the budget circular is issued; however, Tier 2 spending is not included within these department-level medium-term expenditure ceilings.

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Medium-term strategic plans are prepared and costed for some departments, while the PDP acts as a strategic plan for the remaining departments. The PDP is not costed. Most expenditure policy proposals approved in the medium-term budget estimates align with the PDP and where available, strategic plans.

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Budget documentation does not explain changes in medium term expenditure forecasts.

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A clear annual budget calendar is developed by the Department of Budget and Management (DBM) annually and is generally adhered to. Departments have at least six weeks from receipt of the budget circular to meaningfully complete their detailed estimates on time. For the 2024 Budget, most budgetary units were able to complete their detailed estimates on time (82%).

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DBM issued budget circulars are clear and comprehensive, though only include departmental ceilings for Tier 1 spending. These ceilings are not approved by the Cabinet in advance of circulation

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The executive has submitted the annual budget proposal to the legislature at least two months before the start of the fiscal year in each of the last three years.

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The scope of budget scrutiny by the legislature covers fiscal policies, medium-term fiscal forecasts, medium-term priorities, aggregate expenditure and revenue, but medium-term priorities are not part of the budget documents and there is no evidence that Congress is reviewing the medium-term budget.

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There are established rules and procedures that the legislature adheres to in the process of budget scrutiny.

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There are no legislative texts that made a formal timeline for budget approval but in practice, the Philippine Congress approves the budget for the next fiscal year before the end of the current fiscal year.

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There are clear and strict laws, rules and regulations that define the scope and limits of in year budgetary adjustment by the Executive branch. These are strictly adhered to by all departments and agencies. However, extensive reallocation may be permitted.

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Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC), which collect most revenues, provide comprehensive information on revenue obligations and rights, but BOC complaint resolution process is not considered sufficientlytransparent by civil society, despite website accessibility.

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BIR and BOC collecting most revenues use approaches that are partly structured for assessing and prioritizing compliance risks for most revenue streams.

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The BIR and the BOC conduct audits and fraud investigations to ensure tax compliance and prevent revenue leakages, but audits are fragmented and are not in accordance with a coherent, systematic, and sound tax compliance risk assessment plan.

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The stock of revenue arrears is below 40 percent of the total revenue collection, but the revenue arrears older than 12months are more than 75 percent of total revenue arrears for the year.

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Bureau of the Treasury (BTr) collects daily revenue data from entities collecting all central government revenue, dividing it by revenue type and consolidating it into a report published monthly.

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Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) transfer daily collections into Treasury Single Account (TSA).

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The BIR and the BOC reconcile assessments, collections and transfers to the Treasury on a monthly basis. Reconciliation of arrears is done quarterly for the BIR and annually for the BOC.

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The Philippine government has implemented tools and procedures for effective cash management, fiscal responsibility and transparency in public financial management(PFM), but accounts for foreign-funded projects and trust accounts with legal basis remain outside the TSA

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The cash flow committee creates and updates a monthly cash flow forecast to reflect actual flows and any changes in the forecast.

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The Philippine government utilizes the General Appropriations Act (GAA) for budget release, eliminating the need for Special Allotment Release Orders (SARO).

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DBM's is providing ongoing oversight and requiring departmental requests and approvals for fund reallocations.

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The agencies are required to submit the list of due and demandable obligations for inclusion to next year’s budget. For 2023, the stock of expenditure arrears was more than 10% of total expenditure in the last completed fiscal years.

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Agencies must submit a list of due and demandable obligations for the next year's budget and annual data on stock and expenditure arrears is generated at the end of each fiscal year, but not all agencies comply with the regulations andinformation may not be exhaustive.

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The Department of Budget and Management (DBM) manages budgeting through a central level Government Manpower Information System (GMIS), while departments maintain personnel and payroll data, with controls over hiring and promotion, and monthly payroll reconciliation

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The personnel record and payroll are updated monthly or quarterly, with likely minimal retroactive adjustments, but no information was provided about the amount of these adjustments to justify the score.

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The control over personnel records and payroll changes, including restricted access and audit trails, is subject to limitations, but some weaknesses remain, and ghost workers may still be identified.

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A strong system of annual payroll audits exists to expose control weaknesses and identify ghost workers. In addition to Commission on Audits’ (COA’s) annual audits, targeted audits were conducted to address specific issues.

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Databases or records are maintained for contracts including data on what has been procured, value of procurement, and who has been awarded contracts. The data are accurate and complete for majority of procurement methods for goods, services and works.

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The total value of contracts awarded through competitive methods in the last completed fiscal year represented more than 60%but less than 70% of total value of contracts.

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The public has access to five of the six key pieces of information on public procurement for at least majority of procurement transactions in value

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The Government Procurement Reform Act (GPRA) in the Philippines does not establish a separate, independent body specifically dedicated to handling complaints related to procurement processes.

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Segregation of duties is prescribed throughout the entire process. The Philippine government's adherence to established internal control guidelines, as evidenced by the National Guidelines of Internal Control Systems (NGICS)and Philippine Government Internal Audit Manual (PGIAM).

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Expenditure commitment controls are in place and effectively limit commitments to projected cash availability and approved budget allocations, but cash availability is not always reliable.

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Most payments are compliant with regular payment procedures. All exceptions are properly authorized in advance and justified.

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All government agencies at the department level have established an internal audit service/unit(IAS/U), but the IAS/U does not report its audit activities to the Commission on Audit (COA).

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Internal audit activities are focused on evaluations of the adequacy and effectiveness of internal controls, but there is not a quality assurance process in place within the audit function in line with international standards.

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No information was provided on the number of audits programmed and carried out by NGAs in 2023, by type of audit. This information is not consolidated.

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No information has been provided on the responses of the NGAs to the audits carried out in 2023. This information is not consolidated

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Bank reconciliation for all active central government bank accounts takes place at least quarterly, usually within one week or month after the end of the period.

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Information on suspense accounts was not provided.

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Advance accounts are reconciled monthly within 10 days of the end of a period. However, a portion of cash advances, particularly those granted to government owned and controlled companies (GOCCs), remained unliquidated at the end of 2023.

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Access and changes to records may be sometimes restricted but not always recorded. There is no centralized database, and spreadsheets are still widely used. No audit trial is in place

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The Unified Reporting System (URS) provides comprehensive data coverage and classification, allowing direct comparison to the original budget, including expenditures from transfers to de-concentrated central government units, but expenditure according to economic classification is presented with partial aggregation.

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Budget execution reports are prepared quarterly and issued within 8 weeks from the end of each quarter.

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The Philippines' Department of Budget and Management has implemented systems to improve budget report accuracy, but not all agencies have fully adopted them, and manual processes remain in use.

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The National Government Agency's (AFR)financial reports provide information on revenue at an aggregated level, expenditure, assets, liabilities, guarantees, and long-term obligations. They are also supported by a reconciled cash flow statement.

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The legal framework requires agencies to submit budget and Financial Accountability Reports (FAR) no later than 30 days after each quarter. In practice, all NGAs submitted completed FAR within 6 months of the end of the year.

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The Philippine Public Sector Accounting Standards (PPSASs) are utilized in annual financial reports, governed by Philippine Application Guidance, Government Accounting Manual, COA Circulars, and International Public Sector Accounting Standards (IPSAS) implementation guidelines.

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International Standards of Supreme Audit Institutions (ISSAI) standards are followed for audits, with most expenditure and revenues audited in the last three fiscal years. However, data access issues hinder the complete audit of BIR's 66% revenue collection.

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Audit reports in the form of the Annual Financial Statement (AFS) are submitted to Congress within 7 months of receipt of the financial reports by Commission on Audit (COA).

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Audited entities must report on audit findings and recommendations within 60 days of receipt, with the Agency Action Plan tracking compliance annually. In 2023, 52% of recommendations were implemented, but 22% needed repetition.

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COA’s independence is ensured by law, it operates independently from the executive, and has access to records,documentation and information for most audited entities.

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There is no formal scrutiny of audit reports on annual financial reports by the legislature.

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The legislature does not conduct formal committee hearings on key findings of audit reports. Ad-hoc hearings are convened by the House of Representatives and the Senate, with audit findings acting as one of the drivers behind the hearing.

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There is no formal review process therefore no recommendations are provided.

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There is no formal review therefore the issue of transparency does not arise.