2.1. Section 74 of P.D.1445, otherwise known as the Government Auditing Code of the
Philippines, states that:
“At the close of each month, depositories shall report to the agency head,
in such form as he may direct, the condition of the agency account
standing on their books. The head of the agency shall see to it that a
reconciliation is made between the balance shown in the reports and the
balance found in the books of the agency.”
2.2. To establish the existence and accuracy of the Loans Payable account, the audit
team sent out bank confirmation letters to the authorized government depository
banks within the Province. Confirmation from third parties like depository banks is
an important audit procedure because evidence obtained from independent sources
outside an entity may provide greater reliability assurance.
2.3. The results of the bank confirmation revealed that the Municipality had an
outstanding loan balance with the Land Bank of the Philippines amounting to
₱387,488,045.28 as of December 31, 2024. However, the Loans Payable account
reflected in the financial statements showed a balance of only ₱385,608,730.24,
resulting in a difference of ₱1,879,315.04. The details of this variance are presented
as follows:
Term Description Balance per Balance per Overstated/
Loan Books Bank (Understated)
No. Confirmation
3 Mabinay Spring Resort ₱ 50.11 ₱ 0.00 ₱ 50.11
3 Rehabilitation of FMR 4,478.52 0.00 4,478.52
5 Construction of 2-Storey
24,252,036.28 24,226,977.45 25,058.83
Commercial Building
6 Construction of People’s
Park with Commercial 15,881,494.76 15,868,117.75 13,377.00
Stalls
7 Improvement and
Expansion of Wet Market 17,425,232.49 17,535,522.49 (110,290.00)
and Vegetable Building
8 Construction of
121,375,722.25 122,230,770.25 (855,048.00)
Government Center
9 Construction and
83,248,560.81 83,769,459.81 (520,899.00)
Rehabilitation of FMR
10 Water Works System 22,019,406.63 22,156,164.63 (136,758.00)
11 Heavy Equipments 27,966,403.00 28,265,687.50 (299,284.50)
12 Government Center-Site
44,913,577.69 44,913,577.69 0.00
Development
13 Improvement of Mabinay
20,025,681.70 20,025,681.70 0.00
Spring Resort
14 Acquisition of LED Wall 1,999,586.00 1,999,586.00 0.00
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