Findings No.1 COA Annual Audit Report 2004

July 26, 2008

1. Plant, Property and Equipment account was erroneously reduced by P1,171,054.71 due to erroneous conversion of accounts, thus the asset and government equity accounts are understated by same amount.

Pursuant to the constitutional mandate of the COA to promulgate accounting and auditing rules and regulations, COA issued Circular No. 2001-005 dated October 20, 2001 which provided for the accounting rules on the conversion of accounts from the old accounting system to the New Government Accounting System (NGAS) for adoption by all local government units except barangays.

In an attempt to convert the old accounts to the new accounts prescribed in the New Government Accounting Manual, the following accounts were erroneously dropped from the books:

Accounts AffectedAmountRemarks

1. School BuildingsP853,147.50Credited and offset with the old Invested Surplus Account2. Furniture and Fixtures270,908.52Credited and offset with the old Invested Surplus Account3.Other Property, Plant and Equipment

46,998.69Credited and offset with the old Invested Surplus AccountTotalP =SUM(ABOVE) 1,171,054.71

Analysis of Journal Entry Voucher # 221-2002-01.1 (Annex 1) dated January 2, 2002 showed that there was error in the conversion entries. Invested Capital was closed to Government Equity Account. Property accounts were closed by a debit to Government Equity.

The effects of the erroneous entries of conversion are as follows:

Understatement of the asset account because supposedly these assets accounts should remain as is, but with the erroneous conversion the subject properties were dropped from the books of accounts.

Understatement of the Government Equity account. By crediting the assets account instead of the new Government Equity account, there was a corresponding decrease of the latter by same amount.

Management confirmed the above deficiency and promised to effect the necessary adjustment in the current year.

Recommendation:

Instruct the Provincial Accountant to restore the property accounts in the books by debiting School Buildings for P853,147.50; Furniture and Fixtures for P270,908.52; Other Property, Plant and Equipment for P46,998.69 and crediting Government Equity for P1,171,054.71.

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Written by admin · Filed Under Commission on Audit, Misamis Occidental