The LGU recognizes the effects of changes in accounting estimates
prospectively by including in surplus or deficit.
3.13 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 are regarded as
related parties and comprise the Mayor, and Vice-Mayor, Sanggunian
Members, Committee Officials and Members, Accountants, Treasurers,
Budget Officers, and all Chiefs of Departments/Divisions.
3.14 Budget information
The annual budget is prepared on the 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 bases, 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 under-spending on line items.
3.15 Significant judgments and sources of estimation uncertainty
Judgments
In the process of applying the LGU’s accounting policies, Management
has made judgments, which have the most significant effect on the
amounts recognized in the consolidated financial statements.
Estimates and assumptions
The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. The LGU
based its assumptions and estimates on parameters available when the
consolidated financial statements were prepared. However, existing
circumstances and assumptions about future developments may change
due to market changes or circumstances arising beyond the control of the
LGU. Such changes are reflected in the assumptions when they occur.
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