7.4. Of the above accounts, only Other Receivables had a partial disclosure totaling
₱283,218.77, which included ₱280,000.00 representing amounts extended to
farmer-beneficiaries to augment their income through livelihood projects, and
₱3,218.77 from various creditors aged two to ten years, leaving ₱1,300,000.00 with
no additional information. The remaining accounts had no explanatory notes or
supplementary details to help clarify the balances.
7.5. It must be emphasized that the Notes to FS are explanatory notes regarding the
accounts and/or accounting policies that add value to the financial statements.
Furthermore, this disclosure also ensures that the Municipality is transparent in its
operations and provides financial users with adequate information necessary for
decision-making purposes. Since the preparation of the FS, including the Notes, is
the responsibility of Management, it must be carried out with due diligence and
accuracy, both in form and substance.
7.6. Given the above, the failure to disclose relevant and sufficient information in the
Notes to the Financial Statements, as required by PPSAS No. 1, indicates a
significant lapse in financial reporting practices. This impairs the usefulness of the
FS and raises concerns over the integrity of financial data reported by the
Municipality.
7.7. We recommended that the Municipal Accountant ensure full compliance with
the disclosure requirements of Sections 127 and 129 of PPSAS No. 1 by
providing comprehensive and relevant explanatory notes for all significant
account balances in the financial statements.
7.8. The Municipal Accountant commented that the details and breakdowns of the above
accounts were presented through schedules and subsidiary ledgers. However, she
committed to providing relevant and comprehensive information in the Notes to the
Financial Statements in the next submission, to ensure full compliance with
disclosure requirements.
7.9. The Auditor would like to remind the Municipal Accountant that, unlike the Notes
to the Financial Statements, which are included in the audited financial statements,
schedules and subsidiary ledgers, which contain detailed records supporting specific
general ledger accounts, are maintained internally and do not form part of the
audited financial statements incorporated in the Annual Audit Report. It is
emphasized that it is important to provide narrative explanations and sufficient
details in the Notes to the Financial Statements to ensure transparency, proper
disclosure, and compliance with applicable standards.
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