in accordance with IPSAS 27 to provide relevant information that may affect
the fairness of the presentation of the financial statements.
B. OTHER FINANCIAL-RELATED ISSUES
Bank Reconciliation Statement
5. Monthly Bank Reconciliation Statements (BRS) for CY 2024 were not prepared and
submitted to the Office of the Auditor, which is inconsistent with Section 74 of P.D.
No. 1445 and Sections 3.2 and 3.4 of COA Circular No. 96-011, thus the total balance
of the accounts Cash in Bank-Local Currency Current (1-01-02-010) and Cash in
Bank-Local Currency Savings (1-01-02-020) could not be validated, hindering the
timely reconciliation book and bank balances and the detection of errors and/or
fraud, if any.
5.1. Section 74 of Presidential Decree (P.D.) No. 1445 provides that “at the close of each
month, depositories shall report to the agency head, in such form as he may direct,
the condition of the agency account standing on their books. The head of the agency
shall see to it that a reconciliation is made between the balance shown in the reports
and the balance found in the books of the agency.” [Underscoring supplied]
5.2. Likewise, Sections 3.2 and 3.4 of COA Circular No. 96-011 dated October 2, 1996,
state that:
“3.2 The Local Accountants shall within ten (10) days from receipt of the
Bank Statements, reconcile the same (BS) with the General Ledgers
(GL) and prepare the BRS in five (5) copies, x x x."
“3.4 The duplicate and quadruplicate copies of the BRS including the paid
checks, original copies of debit/credit memos, shall be submitted to
the Auditor concerned for verification within ten (10) days for receipt
after the end of each month.”
5.3. The BRS is integral to preparing the Local Government Unit’s financial statements.
This statement determines the accuracy and reliability of the accounts Cash in Bank-
Local Currency Current (1-01-02-010) and Cash in Bank-Local Currency Savings (1-
01-02-020) as presented in the financial statements. Moreover, the monthly BRS is a
tool for maintaining financial accuracy and transparency to detect errors,
discrepancies, and potential fraudulent activities. By comparing internal financial
records with bank statements regularly, any inconsistencies can be promptly
identified and rectified, preventing financial misstatements and ensuring the
reliability of financial information.
5.4. Moreover, the monthly BRS contributes to a sound cash flow management and
facilitates better decision-making by providing an accurate amount of available
funds. In essence, the monthly preparation of BRS is essential in financial
46
