7.3 Our interview with the municipal accounting personnel revealed that the
misclassification resulted from an oversight in reviewing the nature of the
transactions during the preparation and approval of the related JEVs.
7.4 Such misclassification of expenses contradicts COA Circular No. 2015-009, dated
December 1, 2015, and leads to inaccurate financial reporting because recorded
transactions do not accurately reflect their true nature, which can potentially
mislead decision-makers, auditors, and stakeholders.
7.5 As a result of the foregoing, the Other MOOE account was overstated by
₱1,006,552.50, while the Prizes and Training Expenses accounts were understated
by ₱148,100.00 and ₱205,650.00. On the other hand, the balances of the inventory
account and the related expense account are misstated by an undetermined amount
due to the non-submission of the inventory of supplies held in stock at the end of
the year.
7.6 We recommended and the Municipal Accountant agreed to ensure that only
transactions not falling under any of the specific maintenance and operating
expense accounts are recorded under the Other MOOE account.
Furthermore, we recommended and it was agreed that personnel authorized
to prepare and approve the JEVs be properly instructed to ensure that the
accounts used align with COA Circular No. 2015-009, dated December 1,
2015.
7.7 The Municipal Accountant further explained that the transactions intended to be
recorded under specific inventory accounts were initially categorized as
disbursements under Other MOOE for the GAD, LDRRM, and Special Purpose
Appropriation, as reflected in the records of the Municipal Budget Officer.
8. Taxes totaling ₱480,012.50 paid for the processing of land title acquisition were
incorrectly recorded as expenses under “Other Maintenance and Operating
Expenses” instead of being capitalized as part of the cost of the land, contrary to
Paragraph 30 of IPSAS 17, resulting in the understatement of the Property, Plant,
and Equipment (PPE) account and the overstatement of expenses by the same
amount.
8.1 Paragraph 30 of International Public Sector Accounting Standard (IPSAS) 17
identifies the elements of the cost of an item of PPE. It provides that the cost of an
item of PPE comprises:
a) Its purchase price, including import duties and non-refundable purchase
taxes, after deducting trade discounts and rebates.
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