CHAPTER 1
THE PROBLEM AND ITS BACKGROUND

Introduction
Budgeting is the cornerstone of the management control process in nearly all organizations including government agencies. Practitioners express concerns about using budgets for planning and performance evaluation. The practitioners argue that budgets impede the allocation of organizational resources to their best uses and encourage myopic decision making and other dysfunctional budget games. They attribute these problems, in part, to traditional budgeting’s financial, top-down, command and control orientation as embedded in annual budget planning and performance evaluation processes (as cited in Hansen, Van der Stede & Otley, 2008 pp. 95)

A government budget is the financial plan of a government for a given period, usually for a fiscal year. The budget is the government’s key instrument in promoting its socio-economic objectives. The use of government funds is based on Article VI, section 29 of the 1987 constitution that “No money shall be paid by the Treasury except in pursuance of an appropriation made by law.” (Domingo, Liz, & Ruado, 2013) Funds are used by the government for public interest in which it has the sovereignty, but in general, budgets can differ from the actual expenditures. These differences should be justified and presented to the Congress and Senate for the approval of the next annual budget. Background of the Study

The Philippines' Department of Energy (Filipino: Kagawaran ng Enerhiya), abbreviated as DOE is the executive department of the Philippine Government responsible for preparing, integrating, coordinating, supervising and controlling all plans, programs, projects and activities of the Government relative to energy exploration, development, utilization, distribution and conservation. It was created by President Marcos as he issued Presidential Decree No. 1206 which created the Ministry of Energy and attached the National Power Corporation and Philippine National Oil Company to this new agency. The Ministry was abolished during the Regime of Corazon Aquino. During the Regime of President Fidel V. Ramos, that Department was created by virtue of Republic Act No. 7638 otherwise known as the Department of Energy Act of 1992. The Department was vested additional powers and functions under pertinent energy and power related legislations, such as Republic Act No. 9136 or the "Electric Power Industry Reform Act of 2001", Republic Act No. 9367 or "Biofuels Act of 2006", and Republic Act No. 9513 or "Renewable Energy Act of 2008."

In this study, the interviewees are the officers in the budgeting and accounting department. They are given the chance to evaluate themselves whether they have formulate their budgets in compliance with the guidelines included in the Budget Call that DBM issues every year. These guidelines are essential for the formulation of the budget of every government agency because it sets the ceiling that each of them may expend and contains required documents they need to submit. Each government agency receives Budget Call that is similar with the other government agency and this Budget Call is what each of the government agency considers as their bible since all that is written in the Budget Call must be complied; otherwise, they will be subject for further questioning which may have a positive or a negative result. They can also evaluate the controls adopted so as to determine if the present controls are sufficient to guarantee an effective implementation of the approved budget and to assure that the actual expenditures are not exceeding the allotted amounts for that ty...

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