4.8. The inability to transfer the cost of the above PPE accounts from the Trust Fund
to the General Fund resulted in the overstatement of the PPE accounts in the Trust
Fund and the understatement of the same accounts in the General Fund.
Moreover, the non-provision of depreciation expenses for these PPEs understated
the total expenses and overstated the equity accounts in the General Fund by an
undetermined amount, thus adversely affecting the fairness of presentation of the
financial statements.
4.9. This observation was communicated to Management through Audit Observation
Memorandum No. 2025-01(2024)-Manjuyod dated February 21, 2025.
4.10. We recommended and Management agreed that:
4.10.1. The Municipal Mayor require the Municipal Engineer to provide the
Municipal Accountant with a report on completed Trust Fund
projects so that these can immediately be transferred to the General
Fund.
4.10.2. The Municipal Mayor require the Municipal Accountant to prepare
the following journal entry to transfer the completed PPE amounting
to ₱3,521,153.86 under the Trust Fund to the General Fund:
Debit Credit
A. Trust Fund Books:
Government Equity 3,521,153.86
Road Networks 589,360.76
Flood Control Systems 49,240.00
Water Supply Systems 213,910.00
Other Structures 940,743.10
Other Machinery and Equipment 228,900.00
Motor Vehicles 1,499,000.00
B. General Fund Books:
Road Networks 589,360.76
Flood Control Systems 49,240.00
Water Supply Systems 213,910.00
Other Structures 940,743.10
Other Machinery and Equipment 228,900.00
Motor Vehicles 1,499,000.00
Government Equity 3,521,153.86
4.10.3. The Municipal Mayor require the Municipal Accountant to
recognize the corresponding depreciation expenses for the completed
projects in the General Fund.
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