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Findings No.7 COA Annual Audit Report 2004

July 25, 2008

7. The composition of Government Equity account reflecting a balance of P1,863,987,091.65 was not disclosed/established in the Notes to Financial Statements, casting doubts on the correctness and reliability of the financial statements.

Section 80 Vol. 1 of the Manual on the New Government Accounting System discusses the Notes to Financial Statements. It states that:

“The Notes to Financial Statements 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.”

In the review of the accompanying Notes to Financial Statements, we noted the non-disclosure of the composition of Government Equity account, which has a balance of P1,863,987,091.65.

The composition of Government Equity includes the following:

Invested Surplus

Balances of Continuing Appropriations

Balances of Certified Obligations (not recorded as Accounts Payable)

Appropriated Surplus

Unappropriated Surplus

Prior’s Years Adjustment

Recommendation:

Direct the Accountant to establish the composition of Government Equity account.

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

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