5.6 We recommended and the Municipal Treasurer and Municipal Accountant
agreed to trace the differences between the cashbook and the General Ledgers
of the Cash Local Treasury, Advances for Operating Expenses, and Advances
for Payroll accounts. We further recommended that, henceforth,
Management require the Municipal Treasurer and Municipal Accountant to
properly conduct the quarterly reconciliation between the treasury records
and accounting records in compliance with Section 143 (A.7) of the LTOM.
Dormant receivable accounts - ₱2,108,562.90
6. The Municipality did not implement the procedures prescribed under COA
Circular No. 2023-008 dated August 17, 2023, on the proper disposition and
cleansing of dormant accounts totaling ₱2,108,562.90, resulting in the continued
recognition of unsupported balances in the financial records and impairing the fair
and faithful presentation of the Municipality’s financial statements.
6.1 COA Circular No. 2023-008 dated August 17, 2023, establishes guidelines for the
proper disposition of dormant accounts held by local government units (LGUs)
that are not governed by specific laws, rules, or regulations. It also aims to expedite
the cleansing of dormant accounts across government agencies, ensuring the fair
presentation of financial statements. This circular amends COA Circular No.
2016-005, dated December 19, 2016. Under the new circular, dormant accounts—
defined as those that have remained inactive in the books of accounts for ten (10)
years or more—may only be derecognized upon the grant of specific authority by
the Commission on Audit (COA).
6.2 The Circular provides for the procedures for the proper disposition of dormant
accounts, derecognition of dormant accounts, journal entries, and monitoring and
reporting. However, it expressly states that its provisions should not be interpreted
as condoning the write-off of these accounts or extinguishing existing obligations.
Furthermore, the Circular does not serve as grounds for exonerating officers or
employees from liability in cases of infidelity in the custody of official documents.
It reinforces the principle that accountability and proper stewardship of
government records remain imperative, even in the process of addressing dormant
accounts.
6.3 Item 7.0 of the Circular requires the Head of the Accounting Unit to review and
analyze the existence of all dormant accounts and secure all available documents
relative to said accounts. However, if the review and analysis is not possible due
to the absence of records and documents, or when original documents are lost or
destroyed, or cannot be produced, the Head of the Accounting Unit shall prepare
a list of available records relative to the dormant account and indicate the extent
of validation made thereof and attach all documents to the list. Additionally, a
detailed list of all the lost documents or records must be included. He shall then
prepare and submit a detailed report to the Head of Agency recommending the
conduct of an investigation to determine the cause/s of the loss of documents and
pinpoint the official/s and employee/s liable for the loss.
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