9.2 Our review of the BRS for December 2024 revealed a total outstanding checks of
₱3,398,509.05. However, our verification of these outstanding checks, based on
the records of the Municipal Treasurer’s Office, indicated that out of the
₱3,398,509.05, ₱1,792,371.24 was released to the payees in January 2025. The
details of these checks are presented in Annex A.
9.3 As shown in Annex A, the total checks amounting to ₱1,792,371.24 should not
have been classified as outstanding checks, as they had not been released to the
payees as of December 31, 2024. Instead, these checks should be added to the
unadjusted balance per book in the Bank Reconciliation Statement (BRS).
Consequently, adjusting journal entries should be made to debit the Cash in Bank
account and credit the appropriate liability account.
9.4 An interview with the Municipal Accountant revealed that she recorded the
checks totaling ₱1,792,371.24 even before they were released to the payees as of
December 31, 2024. However, this practice was contrary to the check
disbursement process prescribed in the New Government Accounting System
(NGAS) Manual for Local Government Units (LGU), Volume I. Section 44 of
the NGAS Manual requires the accountant to prepare the JEV only after receiving
the Report of Check Issued (RCI) along with the DVs and supporting documents.
She must then record the JEV in the Check Disbursements Journal.
9.5 As a result of the foregoing, the recorded unreleased checks of ₱1,792,371.24
understated the Cash in Bank and Liability accounts by the same amount.
9.6 We recommended and the Municipal Accountant agreed to prepare JEVs
for valid reconciling items that require adjustment and correction in the GL,
in accordance with COA Circular No. 96-011 dated October 2, 1996.
9.7 We further recommended and the Municipal Accountant agreed to follow
the check disbursement process prescribed in Section 44 of the NGAS
Manual for LGUs, Volume I, to ensure that the JEVs are prepared and
recorded based on the RCI together with the DVs and supporting documents
received from the Municipal Treasurer’s Office.
Dormant receivable accounts - ₱860,048.41
10. The Municipality did not implement the procedures prescribed under COA
Circular No. 2023-008 dated August 17, 2023, for the proper disposition and
cleansing of dormant accounts totaling ₱860,048.41, resulting in the continued
recognition of long-standing, undocumented balances in the financial records and
impairing the fair and faithful presentation of the Municipality’s financial
statements.
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