accounts and henceforth, record purchases and utilization of supplies and
materials in accordance with Section 114 of the NGAS Manual for LGUs,
Volume I and Section IV of COA Circular No. 2014-002 dated April 15, 2014,
to fairly present the expense and inventory accounts in the financial
statements.
4.9 The Municipal Accountant explained that the Accounting Office records these
expenses in the same period as the budget allocations to ensure timely
reconciliation of the accounting and budgetary records.
4.10 Management is reminded, however, that variances between budgeted and actual
amounts are reflected in the reconciliation of the Statement of Comparison of
Budget and Actual Amounts (SCBAA) and the Statement of Financial
Performance, which the Municipal Accountant should duly reconcile.
Prior year expenditures were erroneously recorded as current year expenses -
₱2,305,292.13
5. Prior year expenditures aggregating ₱2,305,292.13 were erroneously recorded as
current year expenses, contrary to Section 119 of PD No. 1445 and IPSAS 1,
therefore resulting in the overstatement of the related expense accounts and
understatement of the surplus for the current period, affecting the fairness of the
presentation of the financial statements.
5.1 Section 119 of Presidential Decree (PD) No. 1445 states that all lawful
expenditures and obligations incurred during the year shall be taken up in the
accounts of that year.
5.2 Further, the International Public Sector Accounting Standards (IPSAS) 1 –
Presentation of Financial Statements, provides that each entity shall recognize and
present its financial transactions and operations conformably to the accrual basis
of accounting.
5.3 The accrual basis is a means of recording transactions and other events when they
occur, and not only when cash is received or paid. Revenues are recognized when
they are earned, regardless of when payment is received, and expenses are
recognized when they are incurred, regardless of when they are paid. On this basis
of accounting, transactions and events are recorded in the accounting records and
recognized in the financial statements in the period to which they relate.
5.4 A review of the Municipality’s financial records revealed that in CY 2024,
expenses incurred during the previous year, CY 2023, totaling ₱2,305,292.13, were
erroneously recorded in the books of accounts as expenses for the audited year.
The aforementioned expenditures are summarized on the next page:
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