Therefore, the recording of obligations must be supported by perfected contracts,
billing statements, delivery receipts, inspection and acceptance reports, and other
pertinent documents to ensure the validity of the claims.
3.9 Due to the lack of availability of supporting documents to substantiate the AP
amounting to ₱2,465,908.11, of which ₱2,232,423.11 has been outstanding for more
than two years, we could not ascertain the validity of the accounts. These accounts
were also doubtful because it is unlikely that the suppliers or claimants would wait for
a long time to be paid or claim what was supposedly due to them. Consequently, the
financial statements might not have been fairly presented because a substantial
amount may no longer represent valid claims.
3.10 We recommended that the Municipal Accountant coordinate with the Municipal
Budget Officer and the Municipal Treasurer to determine whether the Accounts
Payable totaling ₱2,465,908.11, aged from over one year to more than 10 years,
were recorded based on obligation requests duly supported by supplier
bills/invoices and accomplished Inspection and Acceptance Reports, to ensure
the validity and accuracy of the liability account presented in the financial
statements.
3.11 We further recommended that, henceforth, the Municipal Accountant recognize
liabilities only at the time goods and services are accepted or rendered and
supplier or creditor bills are received, based on valid claims that are adequately
supported by sufficient and appropriate evidence.
3.12 The Municipal Accountant commented that the details of transactions recorded as
accounts payable, totaling ₱2,465,908.11, will be reviewed to verify the validity of
the claims. Subsequently, a reversion to the unappropriated surplus will be made for
those without actual claims or not covered by perfected contracts on record.
Erroneous Recording of LDRRM Expenses
4. The cost of 12,644 bags of 10-kilogram rice, amounting to ₱7,143,860.00, procured
using the prior years’ unexpended LDRRMF, was incorrectly recorded as a direct
debit to the Trust Liabilities – DRRMF account instead of the Welfare Goods
Expenses account, contrary to the accounting treatment prescribed under COA
Circular Nos. 2012-002 and 2015-009, thus affecting the reliability of financial
reporting and the accurate presentation of expenses related to disaster response.
4.1. COA Circular No. 2012-002 dated September 12, 2012, prescribes the accounting
and reporting guidelines for the Local Disaster Risk Reduction and Management
Fund (LDRRMF) of Local Government Units (LGUs), the National DRRMF
provided to LGUs, and Receipts from other sources.
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