3. Summary of Significant Accounting Policies
3.1 Basis of accounting
The consolidated financial statements are prepared on an accrual basis in
accordance with the International Public Sector Accounting Standards (IPSAS).
3.2 Consolidation
The controlled entities (funds) are all those over which the controlling entity has
the power to govern the financial and operating policies. Inter-group
transaction, balances and unrealized gains and losses on transactions between
entities and funds are eliminated in full. The LGU maintains special accounts
under the General Fund for the following economic enterprises it operates:
• Market Operations
• Slaughterhouse Operation
• Cemetery Operations
3.3 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.
The LGU availed of the 5 – year transitional provision for the recognition of
Tax Revenue- Real Property and Special Education Tax. For the first year, there
will be no change in policy for the recognition of the aforementioned tax
revenue.
11
