Note 3 – Summary of significant accounting policies
3.1 Basis of accounting
The combined financial statements are prepared on an accrual basis in
accordance with the International Public Sector Accounting Standards
(IPSAS).
3.2 Combination/Consolidation
The consolidated financial statements reflect all the assets, liabilities,
revenues, and expenses of the Municipality covering all funds. These funds
include the General Fund, Special Education Fund and Trust Fund. The
General Fund is composed of the following Special Accounts:
� General Fund Proper
� Market Operation
� Waterworks System
� Talisay Beach Operation
� Agricultural Training Institute (ATI) Operation
� 20% Development Fund
� Local Government Service Equalization Fund (LGSEF)
3.3 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash in bank, deposits
on call and highly liquid investments with an original maturity of three
months or less, which are readily convertible to cash and they present
insignificant risk of changes in value because of changes in interest rates.
Petty Cash Fund (PCF) is maintained under an imprest system wherein
replenishment is charged to the expense account. The PCF is not used to
purchase regular inventory items for stock.
3.4 Investments
The LGU limits its exposure to risk by investing in authorized depository
banks.
3.5 Receivables
Receivables represent amounts collectible from various constituents,
taxpayers, other local government units, national government agencies,
municipal officials and employees arising from claims for money lent, real
property taxes due to the local government unit and cash advances granted for
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