b. Conduct a comprehensive review of all PPE items to identify assets that
have not been depreciated and ensure that depreciation is
systematically applied in accordance with IPSAS 45, specifically
Paragraphs 26 and 41. This includes recognizing depreciation for each
significant component of an asset, where applicable; and
c. Compute the appropriate depreciation expense for the previously
omitted PPE items and recognize the corresponding accumulated
depreciation to correct the misstatement. The necessary adjusting
journal entries should be prepared and recorded to reflect the accurate
net book value of the affected assets and to eliminate the overstatement
in both the asset and equity accounts.
Cash receipts for fund transfers from the National Government not reported in the Statement
of Cash Flows - ₱65,332,120.00
3. Cash receipts for fund transfers from the National Government, amounting to
₱65,332,120.00, were not reported in the Statement of Cash Flows. Instead, these
amounts were deducted from the payments to suppliers, which is inconsistent with
Paragraphs 18, 19, and 22 of International Public Sector Accounting Standard
(IPSAS) 2, leading to inaccurate and unreliable representations of cash inflows and
outflows under the Municipality’s operating activities.
3.1 Paragraph 18 of IPSAS 2 states that the cash flow statement must report cash
flows during the period, classified by operating, investing, and financing
activities. Paragraph 19 further clarifies that an entity presents its cash flows from
operating, investing, and financing activities in a manner that is most appropriate
for its operations. Classification by activity provides information that allows users
to assess the impact of those activities on the entity’s financial position, and the
amount of cash and cash equivalents. This information may also be used to
evaluate the relationships among those activities. Paragraph 22 of the same
IPSAS provides examples of cash flows classified under operating activities.
These include, among others, cash receipts from grants or transfers received from
the National Government, as well as cash payments made to suppliers for goods
and services.
3.2 Our verification of the Cash Receipts Journal for CY 2024 showed that the
Municipality received the following funds from various agencies of the National
Government:
Date Agency Purpose Amount
DSWD-RFO Social Pension Program for First Semester
4/22/2024 ₱ 12,432,000.00
VII of 2024
Health Emergency Allowance for July-
5/10/2024 DOH 15,579,000.00
December 2021 and July-December 2022
Tulong Panghanapbuhay sa ating
5/14/2024 DOLE 1,797,120.00
Displaced/Disadvantage Workers Program
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