1.9. The Municipality’s inability to retrospectively reclassify tangible items valued
below ₱50,000.00 that were acquired and issued prior to CY 2024, contrary to COA
Circular Nos. 2022-004 and 2024-006, has resulted in the misstatement of its
financial accounts. Specifically, the non-transfer of semi-expendable items from
PPE to Prior Period Adjustment (PPA) has led to an understatement of PPA and a
corresponding overstatement of Equity amounting to ₱3,199,594.81. These
accounting discrepancies distort the Municipality’s true financial position and
impair the fairness and credibility of the financial reports submitted to stakeholders.
1.10. We recommended and the Municipal Accountant agreed to thoroughly review
all PPE items with individual acquisition costs below ₱50,000.00 that were
acquired and issued prior to CY 2024, and effect the required retrospective
reclassification and adjustments. This includes transferring the carrying
amounts to Prior Period Adjustment and restating the affected comparative
figures in the financial statements, in compliance with Sections 4.2 and 4.6 of
COA Circular No. 2022-004, as supplemented by COA Circular No. 2024-006.
1.11. We further recommended and the Municipal Accountant agreed to implement
the prescribed accounting treatments and documentation protocols moving
forward, including the proper use of Inventory Custodian Slips (ICS) for
applicable semi-expendable items, and ensure timely and accurate recording
based on the guidelines set forth in COA Circular No. 2024-006 and its
annexes.
1.12. The Municipal Accountant submitted a pro forma JEV but will still need to verify
the final amounts to be adjusted.
Accounts Payable
2. The Accounts Payable balance of ₱4,479,781.22 was not fairly presented due to the
inclusion of ₱428,893.60 which remained outstanding for more than two years and
was not reverted to the unappropriated surplus, contrary to Section 98 of
Presidential Decree No. 1445, thus, may no longer represent valid claims.
2.1 COA Circular No. 2015-009 dated December 1, 2015, defines Accounts Payable as
an account used to record the receipt of goods or services on account in the normal
course of trade and business operations. Accordingly, Accounts Payable are
considered current liabilities, as they meet the criteria set forth under paragraph 83 of
the IPSAS 1, which states that a liability should be classified as current when it is
expected to be settled in the normal course of the entity’s operating cycle or is due to
be settled months after the reporting date.
2.2 Relative thereto, Section 98 of the P.D. No. 1445 provides that any unliquidated
balance of accounts payable in the books may be reverted to the unappropriated
surplus of the general fund, provided that these have been outstanding for two years
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