of accounting, transactions and events are recorded in the accounting records and
recognized in the financial statements in the period to which they relate.
4.4 In CY 2024, there were expenses incurred during the previous year, CY 2023,
totaling ₱1,677,395.76, that were erroneously recorded in the books of accounts as
expenses for the audited year. The aforementioned expenditures are summarized
below:
Account Name Amount
Other Maintenance and Operating Services ₱981,349.95
Electricity Expenses 477,056.50
Insurance Expenses 133,160.00
Traveling Expenses – Local 52,634.81
Training Expenses 23,820.00
Donations 9,374.50
Total ₱1,677,395.76
4.5 Our verification of the related disbursements showed that these expenses pertained
to those incurred in the previous year. This included payments for electricity to
NORECO II, donations, insurance expenses, and other costs associated with
training conducted in CY 2023, as well as per diems paid to employees who
traveled in CY 2023, among other items. We noted that these expenditures should
have been accrued in the year they were incurred, and the related disbursements
should have been adjusted to the equity account in CY 2024.
4.6 Upon informing the City Accountant, his office immediately effected
correcting/adjusting entries amounting to ₱826,609.46. The expenses totaling
₱717,926.30 were only erroneously labeled as 2023 charges, when in fact, they
were current year’s expenditures. Details are shown below:
Prior Year’s Immediately Current
Account Name Unadjusted
Expenses Adjusted Year
Other Maintenance and ₱981,349.95 ₱301,033.65 ₱680,316.30 ₱ 0.00
Operating Services
Electricity Expenses 477,056.50 477,056.50 0.00 0.00
Insurance Expenses 133,160.00 0.00 0.00 133,160.00
Traveling Expenses – Local 52,634.81 28,004.81 24,630.00 0.00
Training Expenses 23,820.00 11,140.00 12,680.00 0.00
Donations 9,374.50 9,374.50 0.00 0.00
Total ₱1,677,395.76 ₱826,609.46 ₱717,626.30 ₱133,160.00
4.7 In view of the foregoing, only ₱133,160.00, pertaining to Insurance Expenses,
remained misstated.
4.8 The neglect to record expenses in the year they were incurred and instead charging
them to the current year when they were paid resulted in the overstatement of the
related expense accounts and an understatement of the surplus account by
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