Account Name Amount
Scholarship Grants/Expenses ₱ 1,843,000.00
Other Personnel Benefits 212,273.38
Terminal Leave Benefits 140,323.17
Other Maintenance and Operating Expenses 72,211.57
Internet Subscription Expenses 27,036.01
Telephone Expenses 10,448.00
Total ₱ 2,305,292.13
5.5 Our verification of the related disbursements showed that these expenses pertained
to those incurred in the previous year. This included payments for internet
subscriptions, telephone, and scholarship grants, as well as terminal leave benefits
and monetization of leave credits paid to employees in CY 2023, among other
items. We noted that these expenditures should have been accrued in the year they
were incurred, and the related disbursements should have been adjusted to the
equity account in CY 2024.
5.6 Additionally, we observed that specific expenses were incurred during the middle
of the month, e.g., telephone expenses were incurred in the mid-month period.
Notably, the monthly telephone subscription begins on the 15th of each month. In
such cases, specifically in December of the current year, the standard accounting
practice is to recognize the portion of the expense applicable to the current period
as an expense while recording the prorated accrued expense as a liability. This
ensures that financial records accurately reflect incurred costs and outstanding
liabilities in accordance with the accrual accounting principle.
5.7 The neglect to record expenses in the year they were incurred and instead charging
them to the current year when they were paid resulted in the overstatement of the
related expense accounts and an understatement of the surplus account by
₱2,305,292.13, affecting the fairness of the presentation of the financial statements,
particularly the Statement of Financial Performance.
5.8 We recommended and the Municipal Accountant agreed to:
5.8.1 Make the necessary adjustments to correct the erroneous recording of
prior period expenditures to reflect the actual financial performance of
the Municipal Government of Sta. Catalina, in conformity with Section
119 of PD 1445 and IPSAS 1; and
5.8.2 Direct the Accounting Clerk assigned to record the expenditures to,
henceforth, review those that pertain to the prior period and journalize
these items as adjustments to equity and corresponding real or accrued
accounts rather than to current period expenditures or nominal accounts.
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