6.9 The continued recognition of unsupported dormant accounts totaling
₱2,108,562.90 in the Municipality’s books affects the fair and faithful presentation
of its financial statements, which could mislead users regarding the Municipality’s
true financial condition.
6.10 We recommended and the Local Chief Executive agreed to direct the
Municipal Accountant to:
a. Review and analyze all dormant accounts to determine their validity and
secure/gather all available documents related to these accounts;
b. If a complete review and analysis cannot be performed due to missing
documents and records, he shall then prepare a list of available records
pertaining to the dormant account, indicate the extent of validation
conducted, and attach all documents to the list. A detailed list of all lost
documents or records must be included; and
c. Prepare and submit a detailed report to the Head of Agency
recommending an investigation to determine the cause/s of the missing
documents and identify the official/s and employee/s responsible for the
loss.
6.11 We further recommended and it was agreed that if the investigation results
warrant request for authority to write-off from the Commission, the Head of
the Accounting Unit, through the HoA, should file with or through the ATL
and/or SA, depending on the jurisdictional amount, a request for the approval
of COA to write-off or derecognize the dormant accounts from the books. The
request shall be supported by the documents listed in Annex 8 of the Circular.
Misclassification of expenses
7. Purchases of inventory items and the incurrence of various expenses totaling
₱1,006,552.50 were erroneously recorded under “Other Maintenance and
Operating Expenses” account instead of their appropriate accounts, contrary to
COA Circular No. 2015-009 dated December 1, 2015, thereby resulting in
inaccurate financial reporting.
7.1 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 all LGUs record their financial transactions in accordance with the prescribed
Chart of Accounts, effective January 1, 2015. Annex B of the Circular provides
the following account descriptions:
1. Drugs and Medicines Inventory. This account is used to record the cost of
drugs and medicines purchased/received for government operations.
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