5.6. It is important to emphasize that reconciling the Municipal Accountant and
Treasurer’s records for RPT and SET receivables is crucial for ensuring the
accuracy and integrity of financial records. When these records are not reconciled,
significant discrepancies can lead to financial misstatements.
5.7. In this particular case, there is a significant difference of ₱90,418,239.18 between
the MAO and MTO records as of December 31, 2024. Therefore, the RPT and SET
receivable account balances, along with their corresponding Deferred RPT and SET
Income accounts shown in the financial statements at the reporting date, are
unreliable.
5.8. This observation was communicated to Management through Audit Observation
Memorandum No. 2025-04(2024)-Mabinay dated May 27, 2025.
5.9. We recommended that the Municipal Mayor instruct the Municipal
Accountant and Municipal Treasurer to reconcile the difference amounting to
₱90,418,239.18 between the Real Property Tax (RPT) and Special Education
Tax (SET) Receivables account balances.
5.10. To prevent the further accumulation of unreconciled differences, we further
recommended that they, in coordination with the Municipal Assessor, conduct
regular and timely reconciliations of the total collectibles from the Basic and
Special Education Taxes against the recorded RPT and SET Receivables
account balances.
5.11. Additionally, to promote transparency and ensure full disclosure, we
recommended that any remaining unreconciled differences be properly
reported in the Notes to the Financial Statements.
5.12. During the exit conference, the Municipal Accountant explained that upon tracing
the records, she found that recording has been done every beginning of the year but
for the whole amount and not just for the current year, resulting in the bloated
amount.
5.13. The Audit Team recommended that only the current year’s receivables will be
recorded as a setup in the beginning of the year since the delinquent tax receivables
had already been recorded in prior years. The Municipal Accountant assured the
Audit Team that she will prepare the appropriate adjusting entries.
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