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Findings No.4 COA Annual Audit Report 2004

July 28, 2008

Due to inadequacy of subsidiary ledgers for Special Accounts, veracity of the expenses against income accounts could not be ascertained, hence, determination whether income generated are sufficient to meet operating costs could not be achieved.

One of the basic features of the New Government Accounting System (NGAS) is the provision of Special Accounts in the General Fund with complete subsidiary ledgers for public utilities and other economic enterprises.

In relation thereto, Section 107 of the New Government Accounting System (NGAS) provides that special accounts shall be maintained through the use of complete subsidiary ledgers. In case the local government unit maintains a number of the same economic enterprise, each shall have its own set of subsidiary ledger (eg. 8 markets – 8 subsidiary ledgers for the market).

Audit disclosed that during the year, the City Government generated a total income of P 10,890,455.88 from the following operations:

Account

CodeAmountIncome from Markets636P 4,640,288.52Income from Slaughterhouse6372,800,150.88Hospital6313,447,756.44Income from Cemetery6332,260.00 TotalP 10,890,455.84

Verification of the account revealed that only income of the markets, slaughterhouse, hospital, and cemetery operations were accounted in the books of accounts of the City. It was observed further that the City Accountant did not maintain Special Accounts complete with subsidiary records/ledgers that will show the income and expense transactions of each enterprise.

The management justified that the expenses incurred were accounted for and recorded in the appropriate expense account in the general fund.

The inadequacy of subsidiary records/ledgers for special accounts had made the determination of the profitability of each enterprise difficult.

Management concurs with our audit observation.

Recommendation:

Advise the City Accountant to maintain Special Accounts in the General Fund with complete subsidiary ledgers for the operations of markets, slaughterhouse, hospital and cemetery for the easier determination of the profitability of each of the economic enterprise.

Advise also the department heads concerned to prepare separate individual budgets for each economic enterprise.

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

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