Findings No.2 COA Annual Audit Report 2005

July 25, 2008

2. Non-disclosure in the Notes to Financial Statements detailed composition of Government Equity balance of P1,878,587.12 as of December 31, 2005. This information is required under Section 80, Vol. I, of the Manual of the New Government Accounting System for Local Government Units.

Notes to the Financial Statements is an integral part of the financial statements, which pertains to additional information that is necessary for their fair presentation in conformity with generally accepted accounting principles.

Section 80, Vol. 1, of the Manual on the New Government Accounting System for Local Government Units states that:

“The Notes to Financial Statements (Annex 6) are the accountant’s means of amplifying or explaining the items presented in the main body of the statements. These are explanatory notes on the accounts and/or accounting policies, which will give additional information value to the financial statements. In the Notes, the accountant is expected to report the economic substance rather than the legal form of the transactions and to make adequate disclosure.”

Annex 6 hereof, Note 13 – Government Equity, provides the composition of Government Equity such as:

pertaining to the plant, property and equipment including public infrastructure in-process

equity set aside to finance capital projects with appropriations provided in the previous years (continuing appropriations)

obligation allotments of which no liability had been recognized

d) equity allocated to settle existing obligations

e) available for operations

Review of the accompanying Notes to the Financial Statements, Note 12 thereof, gave no information as to the detailed composition of P1,878,587,888.12 carried under Government Equity account. Disclosure of this information is to conform with generally accepted state accounting principles (Sec.80, Vol.I, NGAS).

During the exit conference, the City Accounting Office informed that the Bookkeeping Section of the City Accounting Office is currently working the preparation of the breakdown of the Government Equity account totaling P1,878,587.888.12. But up to the writing of this report, there was not report made on the matter.

Recommendation

Direct the City Accountant to ensure early completion of such information, and henceforth, adhere strictly to generally accepted state accounting rules and regulations.

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Written by admin · Filed Under Commission on Audit, Iligan City