Note 2. Basis of Financial Statement Preparation
The financial statements were prepared in accordance with and in compliance with the
International Public Sector Accounting Standards (IPSAS). The financial statements are presented
in pesos, which is the functional and reporting currency of the Municipalities. The accounting
policies have been applied starting the year 2015.
Note 3. Summary of Significant Accounting Policies
3.1 Basis of accounting
The financial statements are prepared on an accrual basis in accordance with the IPSAS.
3.2 Revenue recognition
Revenue from non-exchange transactions
Taxes, fees, and fines
The LGU recognizes revenues from taxes and fines when the event occurs and the asset
recognition criteria are met. To the extent that there is a related condition attached that
would give rise to a liability to repay the amount, liability is recognized instead of
revenue. Other non-exchange revenues are recognized when it is improbable that the
future economic benefit or service potential associated with the asset will flow to the
entity and the fair value of the asset can be measured reliably.
Transfers from other government entities
Revenues from non-exchange transactions with other government entities are measured
at fair value and recognized on obtaining control of the asset (cash, goods, services and
property) if the transfer is free from conditions and it is probable that the economic
benefits or service potential related to the asset will flow to the LGU and can be measured
reliably.
Revenue from exchange transactions
Rendering of services
The LGU recognizes revenue from the rendering of services by reference to the stage of
completion when the outcome of the transaction can be estimated reliably. The stage of
completion is measured by reference to labor hours incurred to date as a percentage of
total estimated labor hours.
Where the contract outcome cannot be measured reliably, revenue is recognized only to
the extent that the expenses incurred.
Sale of goods
Revenue from the sale of goods is recognized when the significant risks and rewards of
ownership have been transferred to the buyer, usually on delivery of the goods and when
the amount of revenue can be measured reliably and it is probable that the economic
benefits or service potential associated with the transaction will flow to the LGU.
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