Findings No.4 COA Annual Audit Report 2004

July 28, 2008

4. Receivables and payables of General Fund to Special Education Fund and Trust Fund have no reciprocal accounts in the latter, thereby affecting the correctness of account presentation in the Consolidated Financial Condition of the City Government.

Section 28 of the New Government Accounting System Manual, Volume III described the account Due from Other Funds as an account used to record the amount due/receivable from other funds of the LGUs, while Section 152, described Due to Other Funds as also used to record the amount due/payable to other funds maintained by an LGU. This was updated in COA Circular No. 2004-008 dated September 20, 2004 to have the same connotation.

As of December 31, 2004, the General Fund books of accounts showed a balance of P702,235.95 for Due from Other Funds account and P2,540,693.86 for Due to Other Funds account (Annex 4). However, verification disclosed that there were no reciprocal accounts recorded in both the Special Education Fund and Trust Fund books, thereby understating the amount of its receivable and payable accounts by P702,235.95 and P2,540,693.86 respectively:

AccountsTrust Fund BookSpecial Education Fund BookTotalDue From General FundP 2,540,693.86P 0P 2,540,693.86Due to General Fund643,758.1958,477.76702,235.95

The non-recording of reciprocal accounts misstated the presentation of the asset and liability accounts in the Consolidated Financial Condition of the City Government of Tangub as of December 31, 2004.

The management acknowledged the deficiency and promised to correct it.

Recommendation

The Accountant shall record in the books of affected funds, the unrecorded amounts of receivable and payable. She shall see to it that the error will no longer recur.

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