accordance with the definitions and recognition criteria for assets, liabilities,
revenue, and expenses set out in IPSASs.
3.2. Further, Section 7, Chapter II of the Revised Cash Exam Manual, emphasizes that
an accountable officer shall reconcile her cashbook with the accounting records at
least quarterly, unless the agency requires a more frequent reconciliation.
3.3. We have verified the Cash-Local Treasury account as of December 31, 2024, and
observed that the balance per general ledger remained unreconciled with the
balance per cashbook, as shown below:
Account Balance per Books Balance per Cashbook Difference
Cash-Local Treasury ₱6,492,382.56 ₱1,312,295.40 ₱5,180,087.16
3.4. It is worth noting that an audit observation on the unreconciled balance was already
issued during the Calendar Year (CY) 2023 audit. However, our current review
revealed that the discrepancy between the general ledger and the cashbook has
further increased by ₱4,536,214.55 compared to last year’s balance, as illustrated
below:
Account CY 2024 CY 2023 Increase (Decrease)
Balance per Books ₱6,492,382.56 ₱1,864,789.34 ₱4,627,593.22
Balance per Cashbook 1,312,295.40 1,220,916.73 91,378.67
Difference ̈́₱5,180,087.16 ̈́₱643,872.61 ₱4,536,214.55
3.5. Inquiries with the Municipal Treasurer and Municipal Accountant disclosed that
regular reconciliation between the general ledger and the cashbook was not
performed at least quarterly as per regulations. The Municipal Accountant asserted
that she informs the Municipal Treasurer whenever discrepancies are noted so these
may be addressed promptly. However, the latter also informed the audit team that
all cash transactions are completely submitted to the Municipal Accountant. The
Municipal Accountant assured the audit team that she would trace the causes of the
increased unreconciled balance, especially those that pertain to CY 2024
transactions.
3.6. The negligence in the periodic reconciliation of both records not only contravenes
existing rules and regulations but could likewise hamper the determination of
accountability at any given time and the prompt discovery of shortages or errors, if
any. Moreover, the continued existence of the unreconciled balance amounting to
₱5,180,087.16 materially affects the fair presentation of the cash balance in the
financial statements.
3.7. This observation was communicated to Management through Audit Observation
Memorandum No. 2025-01(2024)-Mabinay dated May 7, 2025.
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