equity accounts by the amount of depreciation that should have been applied to these
properties.
Further, the total receivables were understated by ₱54,931,515.89 because no Real Property
Tax and Special Education Tax receivables were reported in the financial statements due to
the absence of coordination between the responsible offices. Also, the accuracy of the cash
in bank balance cannot be assured due to the substantial discrepancy of ₱8,011,497.85
between the reported balance in the financial reports and bank statements, which is yet to
be reconciled.
Lastly, inventories totaling ₱14,179,441.45 were immediately recognized as expenses for
the audited year, instead of remaining in inventory, thus, overstating the expenses and
understating the inventories by the same amount.
Significant Audit Observations and Recommendations
In addition to the above-noted deficiencies, below are the significant audit observations and
recommendations noted in the course of the audit:
1. Expenditures totaling ₱9,806,881.38 incurred for serving meals and snacks,
honoraria, equipment and inventories were incorrectly classified as Other
Maintenance and Operating Expenses (5-02-99-990), and negatively impacts the
effectiveness of financial information available for Management’s decision-
making.
We recommended that the Municipal Accountant establish internal accounting policies
to identify whether a particular expenditure pertains to Other Maintenance and
Operating Expenses, Training Expenses, Extraordinary and Miscellaneous Expenses,
etc. We further recommended that the Municipal Accountant, henceforth, strictly follow
the Revised Chart of Accounts. Lastly, we recommended that the Municipal Budget
Officer, in coordination with the Municipal Treasurer and Municipal Accountant,
ensure that annual appropriation and disbursement of funds for discretionary purposes
are within the statutory limit provided.
2. Procurement of various goods, materials, and supplies totaling ₱3,456,340.65 was
not supported by appropriate and complete documentation, thus, the propriety
and validity of the related disbursements could not be established.
We recommended that the Management, henceforth, ensure that all purchases are
supported by the appropriate and complete documentation.
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