Math 101

Dear insansapinas,

As I had been telling my students in accounting, they do not have to be math wizards to become accountants.


It is simple math that is needed and a bagful of analytical skills to understand and solve the problem.


It is also this simple math that tells you if people with strings of degrees are telling you the real picture of what they want the public to believe.


Take this news:

Budget deficit falls to P8.1b

by Elaine R. Alanguilan

The government posted a budget deficit of P21.5 billion in February, bringing the shortfall in the first two months of the year to a smaller-than-targeted P8.1 billion, the Finance Department said Tuesday.
The government set a budget deficit ceiling of P52.3 billion in the two-month period.

BECAUSE,  Expenditures in February fell to P101.5 billion from P109.9 billion a year ago and to P224 billion in the first two months of 2011 from P239.3 billion on year.

Some people would say allelujah, matipid ang gobyerno; bumaba ang deficit.


Hah!
Let us anal-yze.
Here comes the equation where :
 x= budget deficit -difference between revenues and expenditures
 y= revenues
 z= expenditures
We operate on a budget deficit which means the expenditures are greater than the expected revenues. The budget deficit is financed from other alternative sources of receipts such as bonds and other long term debt instruments. 
So tanong, bakit malaki ang binabudget na expenditures kaysa sa revenues? Kaseh, Virginia, hindi puwedeng hindi gumastos ang gobyerno para tumakbo ang makinarya. Ang di tumatakbong makina ay yong mga nangongolekta dahil sa bulsa napupunta. 
To illustrate using the abacus: 


 x= y-z
let's substitute the letters with numbers. (assumption for example only).
Take last year's figures: Assuming revenue is 8 and expenditures is 14, the budget deficit is negative 6. 
 ( 6) = 8-14
Assuming that z was reduced to 10, budget deficit is decreased to negative 4. (alam naman siguro natin na mas malaki ang value ng negative number pag ito ay mas mababa). 
 (4) = 8-12
Goodah? Nah.


There are ways by which the x or budget deficit could be reduced; either increase the revenues or reduce the expenditures.


In this article, it is clear that it was the latter which reduced the budget deficit since the government admitted that : The BIR was 2.3 percent off its target in February with collections of P53.42 billion, while Customs missed its goal by 10.9 percent at P18.6 billion.


Goodah? Nah?


What's wrong with reduced expenditures?
 The expenditures in the budget are meant for operating expenses of the government and projects that need to be implemented to deliver more efficient services. Reduction of expenditures does not necessarily mean savings. It may mean low quality services and or elimination of  necessary services just to cut corners. Nilalagare pa. Toinkk. Kaya karamihang mga ospital, walang mga supplies at walang mga staff dahil tipid sa suweldo. Kaya ang mga schools, walang upuan at wala ring mga libro ang mga bata? 


Buildings deteriorate because proper repairs and maintenance are not put into effect...again to save money, to cut on the deficit...no action?  for pogi points?



If the reduced budget deficit is only for two months of February, the real expenditures may not have been accounted yet. In government accounting, cash outlay may not be recorded yet  as expenditures until the advances are fully liquidated. Liquidation takes months. Kung baga sa accounting principles, walang matsing ehek matching concept na pwedeng gawin.


So, what is my opinion...Hohum. The structural defects of the school buildings have been in the news and I do not know what the authorities are doing? Gastusin na ang pera. 


Pinaysaamerika