3.9 Changes in accounting policies and estimates
The LGU recognizes the effects of changes in accounting policies
retrospectively. The effects of changes in accounting policies are applied
prospectively if retrospective application is impractical.
The LGU recognizes the effects of changes in accounting estimates
prospectively by including them in the surplus or deficit.
3.10 Related parties
The LGU regards a related party as a person or an entity with the ability to exert
control individually or jointly, or to exercise significant influence over the LGU,
or vice versa. Members of key management personnel are regarded as related
parties and comprise the Governor, Mayors, Vice-Governors and Vice-Mayors,
Sanggunian Members, Committee Officials and Members, Accountants,
Treasurers, Budget Officers, General Services and all Chiefs of
Departments/Divisions.
3.11 Budget information
The annual budget is prepared on a modified cash basis, that is, all planned costs
and income are presented in a single statement to determine the needs of the
LGU. As a result of the adoption of the modified cash basis for budgeting
purposes, there are basis, timing, or entity differences that would require
reconciliation between the actual comparable amounts and the amounts
presented as a separate additional financial statement in the statement of
comparison of budget and actual amounts. Explanatory comments are provided
in the notes to the annual financial statements; first, the reasons for overall
growth or decline in the budget are stated, followed by details of overspending
or underspending on line items.
3.12 Significant judgments and sources of estimation uncertainty
Judgments
In the process of applying the LGUs’ accounting policies, management has
made judgments, which have the most significant effect on the amounts
recognized in the consolidated financial statements.
Operating lease commitments – LGU as lessor
The LGU has entered into property leases of certain of its properties. The LGU
has determined, based on an evaluation of the terms and conditions of the
arrangements, (such as the lease term not constituting a substantial portion of
18
