11.1 Section 4.a of the NGAS Manual for LGUs, Volume I, mandates a modified
accrual basis of accounting that recognizes expenses when they are incurred.
Additionally, Section 4.t requires the accrual of interest income and expenses
when applicable.
11.2 Our review of a Debit Advice dated January 16, 2025, from the Development
Bank of the Philippines (DBP) revealed a total amount of ₱981,053.22 deducted
from its account, detailed as follows:
Principal :₱ 739,777.78
Interest : 238,886.57
GRT : 2,388.87
11.3 An interview with the Municipal Accountant disclosed that the debit advice
pertains to monthly principal and interest amortization for its loan from DBP for
the period from December 16, 2024, to January 16, 2025. However, a review of
the trial balance revealed that neither interest payable nor interest expense was
recognized and recorded for the second half of December 2024. An interview
with the Municipal Accountant showed that there was an oversight in recording
the accrual for this period.
11.4 The omission of accrued interest expense and interest payable has resulted in an
understatement of both expenses and liabilities by ₱119,443.29 as of December
31, 2024.
11.5 We recommended and the Municipal Accountant agreed to prepare the
necessary adjusting entry to correct the omission of the accrued interest not
recorded at year-end, amounting to ₱119,443.29, in accordance with Section
4.a of the NGAS Manual for LGUs, Vol. 1.
Late submission of year-end financial statements
12. The Municipal Accountant was unable to submit the year-end financial statements
(FS) of the Municipality for CY 2024 within the prescribed period, contrary to
Section 41(2) of PD No. 1445 and Section 4.1 of COA Circular No. 2010-01 dated
March 2, 2010, thus preventing municipal officials concerned from utilizing timely
financial information, which is essential for making informed decisions.
12.1 Section 41(2) of Presidential Decree (PD) No. 1445, or the Government Auditing
Code of the Philippines provides that the chief accountant or the official in charge
of keeping the accounts of a government agency shall submit to the Commission
year-end trial balances and such other supporting or subsidiary statements as may
be required by the Commission not later than the fourteenth day of February.
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