Recording of SET in General Fund Books
2. Entries for the Special Education Tax (SET) totaling ₱9,589,520.80 were recorded
in the General Fund’s books instead of the Special Education Fund’s books, which
is inconsistent with Section 235 of RA No. 7160 and Section 88 of the NGAS Manual
for LGUs, Volume I, thus affecting the fair presentation of the SET Receivable and
Deferred SET Income accounts in the financial statements at year-end.
2.1. Section 235 of Republic Act (RA) No. 7160 provides that the proceeds from the
additional levy of one percent (1%) on the assessed value of real property, which
shall be in addition to the basic real property tax, shall exclusively accrue to the
Special Education Fund (SEF).
2.2. Section 88 of the New Government Accounting System (NGAS) Manual for Local
Government Units (LGUs), Volume I, also specifies that in accounting for the SEF,
the Chief Accountant must maintain separate registries for appropriation, allotment,
and obligations as well as books of accounts for the SEF.
2.3. In CY 2024, the Municipal Accountant recorded the following SET-related entries
in the books of the General Fund (GF):
JEV No. Date Entry SET Receivable Entry Deferred SET
100-24-01-0376A 1/31/2024 Debit to 9,273,379.65 Credit to (9,273,379.65)
100-24-06-2241A 6/28/2024 Credit to (5,346.25) Debit to 5,346.25
100-24-10-3400A 10/7/2024 Debit to 97,968.95 Credit to (97,968.95)
100-24-12-4495 12/27/2024 Debit to 223,518.45 Credit to (223,518.45)
Total 9,589,520.80 (9,589,520.80)
2.4. Inquiry with the Municipal Accountant revealed that, in order to segregate the
portion of the SET to be remitted to the Provincial Government, she recorded the
amount in the General Fund’s books under the SET Receivable and Deferred SET
accounts, while the portion intended for the Local School Board remained recorded
in the SEF books.
2.5. This practice is inconsistent with the legal and accounting requirements that
mandate all SET proceeds be exclusively recorded in the SEF and that separate
books of accounts be maintained for the fund. As a result, this misclassification may
have led to the inaccurate and unfair presentation of the SET Receivable and
Deferred SET accounts in the Municipality’s financial statements as of December
31, 2024.
2.6. We recommended and the Municipal Accountant agreed to reclassify the SET
Receivable and Deferred SET accounts recorded in the books of the General
Fund to the books of the Special Education Fund (SEF).
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