₱1,113,365.39, respectively, and thus an overstatement in Equity totaling ₱46,781,906.67.
Furthermore, supplies totaling ₱736,835.00 were recognized as expenses for the audited
year rather than being retained in inventory. Additionally, prior year expenditures
amounting to ₱133,160.00 were erroneously recorded as current year expenses, thereby
overstating expenses by an aggregate amount of ₱869,995.00.
In addition to the financial information mentioned above, the accuracy of the cash balance
reported for the 20 percent development fund cannot be determined due to a substantial
discrepancy of ₱149,539,738.49 between the balance stated in the financial statements and
the data reported in the status of appropriations, allotments, and obligations, which has yet
to be reconciled.
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 for travel and those incurred during gatherings such as consultative
meetings totaling ₱15,751,263.14 were misclassified to other expense accounts,
thereby affecting the usefulness of financial information available for users of
financial statements, especially in the budgeting and decision-making process of
Management.
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. We also
recommended that the City Accountant, henceforth, strictly follow the Revised Chart
of Accounts.
2. The Loans Receivable – Others account includes financial assistance to
cooperatives or non-governmental organizations/people’s organizations
(NGOs/POs), totaling ₱23,682,271.32, thus defeating the purpose of providing
financial assistance to the intended NGO/PO and affecting the fair presentation of
the Loans Receivable account in the Statement of Financial Position.
We recommended that Management strictly implement guidelines and procedures
established under COA Circular No. 2007-001 in granting, utilization, accounting, and
auditing of all funds released to NGOs/POs. We also recommended for Management to
demand liquidation of funds granted. Lastly, we recommended that, henceforth,
Management re-evaluate their true intentions in granting financial assistance to
organizations and individuals, ensuring compliance with the law so that proper
accounting and recording can be made.
iii
