Findings NO.4 COA Annual Audit Report 2004

July 25, 2008

4. Prior years reconciling items for the account Cash in Bank – Local Currency, Current Account (111) totaling P83,173,867.12 remained unadjusted in the books of accounts casting doubt as to the accuracy, validity and reliability of the cash in bank balances for the current year.

COA Circular No. 96-011 dated October 2, 1996 requires the Accountant to submit to the COA Auditor Bank Reconciliation Statements (BRS) within 15 days after the end of each month.

The purpose of the bank reconciliation statement is to reconcile the cash balance per book and the cash balance per bank in order to ensure the accuracy, reliability and/or validity of the depository account balances in the accounting records and in the monthly trial balance and year-end financial statements.

On the last five (5) Annual Audit Reports prepared by our office, the reliability and/or validity of the cash balances were in question because the Accounting Department failed to prepare the required bank reconciliation statements.For Calendar Year 2004, the Accounting Department prepared and submitted 102 Bank Reconciliation Statements as shown below:

Fund AccountName of BankAccount NumberBRS CoverageNo. of BRSGeneral FundPostal Bank100010-70007-21/2004 – 4/20044DBP0-01007-810-51/2004 – 6/20046PCIB1128-00239-81/2004 – 6/20046PVB02301-000280-91/2004 – 6/20046PAB8351/2004 – 4/20044PNB345-8600731/2004 – 6/20046LBP(W E B)0152-0460-141/2004 – 5/20045LBP0152-0010-451/2004 – 4/20044LBP(V)2412-1015-131/2004 – 6/20046Spl. Ed FundPostal Bank100010-70026-91/2004 – 6/20046DBP0-01008-810-11/2004 - 4/20044Trust FundLBP0152-0049-741/2004 – 7/20047LBP(CDF)0152-0429-141/2004 – 7/20047LBP(UHNP)0152-0363-701/2004 – 7/20047LBP((PREM)0152-0429-061/2004 - 7/20045LBP0152-0386-581/2004 – 6/20046DBP(CDF)0-00240-810-81/2004 – 7/20047PNB345-86000651/2004 – 6/20046TOTAL102

The reconciliation statements were made possible by using January 2004 as the cut-off month and January 2004 beginning balances of the bank and the general ledger as the cut-off amount.

Since the reconciliation pertains only to the transactions for Calendar Year 2004, the balances of the cash in bank accounts as of December 31, 2004 carries with it the prior years reconciling items which is the difference between the cash in bank and the general ledger as of December 31, 2003 in the total amount of P83,173,867.12. The prior years reconciling items enumerated below should be reconciled in order to arrive at a reliable and valid cash in bank balances for the current year.

The corresponding prior years reconciling items per cash in bank account is shown below, as follows:

FundBankAccount No.Balance1General FundDBP0-01007-810-521,900,276.532General FundLBP152-0010-451,964,045.423General FundLBP2412-1015-134,883,399.634General FundLBP0152-0460-141,998,690.995General FundLBP2412-1038-260.006General FundPPSB100010-70007-25,390,867.657General FundPCIB1128-00239-85,923,182.858General FundPAB8357,826,504.249General FundPNB345-8600731,452,263.0810General FundPVB02301-000280-93,312,570.8911Special Education FundDBP0-0108-810-13,705,496.4712Special Education FundPPSB1-00010-70026-95,077,965.4813Trust FundDBP0-00240-810-89,398,516.4114Trust FundCDF0152-0429-140.0015Trust FundLBP345-8600065402,893.7616Trust FundLBP0152-0049-749,534,318.0417Trust FundLBP0152-0429-06245,345.2618Trust FundLBP0152-0386-5819,207.5119Trust FundLBP0152-0363-70138,322.91TotalP83,173,867.12

“The findings are noted. However, it is to be informed that the City Accounting Department has partially complied on the previous findings made. It has initiated and complied with the suggested resolution on the problem concerning the volume of transactions, the number of period covered and the deficiency of reports earlier accepted by COA. Hence, the completion of the submission of the Bank Reconciliation Statement including prior years is included in the compliance activity of the Office. The City Accounting Department shall be instructed and ordered by the City Mayor to fast track compliance to this finding in CY 2005.”(Annex D)

Recommendation:

Require the City Accounting Department to include in their priority activities for Calendar Year 2005 the preparation of Bank Reconciliation Statements for Calendar Year 2003, while at the same time maintaining to up-date the preparation of the same statements for Calendar Year 2005 and onwards.

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Written by admin · Filed Under Cagayan de Oro, Commission on Audit