Findings NO.3 COA Annual Audit Report 2005

July 25, 2008

The New Government Accounting System (NGAS) provides for the setting up of the accounts of Real Property Tax and Special Education Tax Receivables effective in CY 2002.

Recording of Real Property Tax (RPT) receivables will guide decision makers and financial statement users in the determination of amount collectibles and evaluation of collection efficiency of the treasurer. With this information, local chief executives can formulate effective alternative action to increase RPT collections. Also, it will facilitate reconciliation of records of the treasurers, assessors and the accounting units.

Section 21 of the Manual on the New Government Accounting System (NGAS), Volume 1, states that payment of delinquencies for Real Property Tax and Special Education Tax (RPT/SET) prior to CY 2002 shall be recognized as direct credit to Real Property Tax/Special Education Tax account.

Records of the City Accountant’s Office showed the following RPT/SET receivables and collections from 2002-2005:

RPT / SET RECEIVABLES:Calendar YearBasic TaxSEFTotal2002P 4,830,000.00P 4,822,834.89P 9,652,834.8920034,460,288.004,274,088.108,734,736.1020046,402,615.745,691,213.9912,093,829.7320056,055,069.645,382,284.1211,437,353.76COLLECTIONS:Calendar YearBasic TaxSEFTotal2002P 3,781,103.14P 4,503,967.85P 8,285,070.9920034,429,835.204,274,088.108,703,923.3320044,976,883.274,366,542.069,343,425.3320055,050,941.265,165,622.8710,216,564.13

Verification disclosed that collections/payments of delinquencies for RPT/SET prior to CY 2002 were:

Taken up or reflected in the prior years’ column of the report/abstract of collections prepared by the Revenue Collectors without specifying the year;

Were credited to RPT/SET Receivables instead as direct credit to RPT/SET Income.

The City Accountant justified that collections/payments of delinquencies for RPT/SET prior to year 2002 were credited to RPT Receivables because the abstract/report of collections prepared by the Revenue Collectors showed only column for prior years without specifying the period covered, hence credited to RPT/SET receivables.

The RPT/SET receivables should not be credited for collections/payment of delinquent RPT/SET prior to year 2002 because these were not booked-up/recorded as receivables. As provided Section 21 of the Manual on the New Government Accounting System (NGAS), Volume 1, payment of delinquencies for RPT/SET prior to CY 2002 shall be recognized as direct credit to Real Property Tax/Special Education Tax income accounts.

The existing system of recording collections/payments of delinquencies for RPT/SET prior to Calendar Year 2002 to RPT/SET receivables is not in accordance with NGAS.

During the exit conference, the City Accountant, together with the Asst. Treasurer promised compliance of the recommendations starting Calendar Year 2006.

Recommendations:

Require the Revenue Collectors to incorporate a column for payments of RPT / SET prior to Calendar Year 2002 in their report of collections.

Require the City Accountant to record collections/payments of delinquencies for RPT/SET prior to 2002 as direct credit to Real Property Tax/Special Education Tax income account.

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