3.10 We recommended that the City Accountant establish internal accounting
policies in identifying whether a particular expenditure pertains to training,
travel, extraordinary and miscellaneous expenses, or other materials and
supplies expenses.
3.11 We also recommended that the Office of the Accountant prepare the
necessary journal entry vouchers to reclassify the affected cash advance
accounts, and henceforth, record all cash advances pertaining to travel in the
Advances to Officers and Employees account and all cash advances pertaining
to intelligence or confidential purposes to the Advances to Special Disbursing
Officer account.
3.12 Lastly, we recommended that the City Accountant, henceforth, strictly follow
the Revised Chart of Accounts, as required in COA Circular No. 2015-009.
3.13 Management explained that they already have a fiscal policy in connection with
their 2025 budget. Hence, they will draft policies and guidelines aligned with the
Revised Chart of Accounts recommended by COA and implement them in CY
2026.
3.14 The City Accountant also clarified that certain cash advances for intelligence
purposes were from individuals who are neither officers nor employees of the City
Government, which explains their classification.
Prior Year Expenditures erroneously recorded as Current Year Expenses – ₱133,160.00
4. Prior year expenditures aggregating ₱133,160.00 were erroneously recorded as
current year expenses, contrary to Section 119 of PD No. 1445 and IPSAS 1,
therefore resulting in the overstatement of the related expense accounts and
understatement of the surplus for the current period, affecting the fairness of the
presentation of the financial statements.
4.1 Section 119 of Presidential Decree (PD) No. 1445 states that all lawful
expenditures and obligations incurred during the year shall be taken up in the
accounts of that year.
4.2 Further, the IPSAS 1 – Presentation of Financial Statements, provides that each
entity shall recognize and present its financial transactions and operations
conformably to the accrual basis of accounting.
4.3 Accrual basis is a means of recording transactions and other events when they
occur, and not only when cash is received or paid. Revenues are recognized when
they are earned, regardless of when payment is received; and expenses are
recognized when they are incurred, regardless of when they are paid. On this basis
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