5.3 Issued and released checks must be presented to depository banks within six
months from the issuance date. If they are not presented, they cannot be accepted
for encashment and are considered no longer negotiable instruments. However,
creditors holding stale checks can receive a new check by submitting the spoiled
or stale check to the Treasurer. The canceled check should be reported and
attached to the Report of Checks Issued (RCI) for the period of cancellation. The
replacement check must also be reported in the RCI.
5.4 Our interview with the Municipal Treasurer revealed that she did not send written
notices to the payees at least one month before their checks became stale.
Additionally, the Municipal Accountant admitted to overlooking these stale
checks, which led to their continued inclusion as outstanding checks and
reconciling items.
5.5 The non-cancellation of stale checks resulted in an understatement of the Cash in
Bank - Local Currency, Current Account balance by ₱198,161.51.
5.6 We recommended and the Municipal Accountant agreed to make the
necessary adjusting entries to account for the stale checks.
5.7 We also recommended and the Municipal Accountant agreed to conduct a
thorough review and analysis of the list of outstanding checks and regularly
prepare the Journal Entry Voucher for the cancellation of stale checks to
reflect the correct monthly balances of the Cash in Bank accounts.
5.8 Furthermore, we recommended and the Municipal Treasurer agreed to
regularly send a written notice to the payee informing him of the check’s
existence at least one month before it becomes stale.
Erroneous recording of expense accounts – ₱170,215.00
6. Expenses for garbage collection and disposal totaling ₱170,215.00 were erroneously
recorded under the Repairs and Maintenance- Land Improvements account instead
of the “Environment/Sanitary Services” account, contrary to COA Circular No.
2015-009 dated December 1, 2015, resulting in an understatement of the
“Environment/Sanitary Services” account and an overstatement of the “Repairs
and Maintenance – Land Improvement” account by the same amount.
6.1 COA Circular No. 2015-009 dated December 1, 2015, prescribes the revised chart
of accounts for local government units (LGUs). Item 4.1 thereof requires that
LGUs record their financial transactions in accordance with the Chart of
Accounts prescribed herein, effective January 1, 2015.
6.2 Annex B of the abovementioned Circular provides the following account
descriptions:
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