5. Service drop wires procured by the Provincial Government for distribution to various
barangays were erroneously recorded as Construction in Progress (CIP)- Buildings and
Other Structures instead of Construction Materials for Distribution, resulting in an
overstatement of CIP accounts by ₽11,495,167.80 and an understatement of the
Inventory and Expense accounts by an undetermined amount, pending submission of
the Inventory Transfer Report (ITR).
6. Interest of ₱5,035,754.82 incurred during the year on loans obtained to finance the
construction of qualifying assets were treated as outright expense contrary to paragraph
18 of IPSAS 5, which requires the capitalization of borrowing costs of qualifying assets,
thereby overstating expense and understating assets.
7. Unserviceable properties with an acquisition cost of ₱2,872,383.09, were not
derecognized from the Property, Plant and Equipment (PPE) account upon disposal, as
their net book value could not be determined due to incomplete subsidiary records.
Furthermore, certain other items could not be traced to the ledger card maintained by
the Provincial Accountant because of limited data and record deficiencies, potentially
resulting in an overstatement of the PPE accounts by an undetermined amount.
8. The accuracy of the Gain on Sale of PPE amounting to ₱1,445,031.25 from the
derecognition of disposed PPE items could not be ascertained, as various unserviceable
properties included in the disposal were not properly derecognized in the books of
accounts.
We conducted our audit in accordance with the International Standards of Supreme Audit
Institutions (ISSAIs). Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the agency in accordance with the ethical requirements that are
relevant to our audit of the financial statements, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Responsibilities of Management and those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with IPSASs and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Those charged with governance are responsible for overseeing the LGU’s financial
reporting process.
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