By: Gerome Dalipe
ABOUT 24 various accounts in the financial statement of the Iloilo Provincial Government amounting to at least P212.17-million contained either unreconciled or unsupported subsidiary ledgers, state auditors found.
The Commission on Audit (COA) said in its annual audit report on Iloilo that subsidiary ledger balances of these idle and unreconciled accounts have no supporting documents, thus it would be hard for the Provincial Government to validate the existence of these account, making them unreliable.
“Erroneous information can mislead the user and may result in misinterpretations and eventually wrong decisions,” read the COA report.
The Philippine Public Sector Accounting Standards provides that the objectives of financial reporting by public sector entities are to provide information about the entity that is useful to users of General Purpose Financial Reports for accountability and for decision-making purposes.
Every local government unit is responsible for the preparation and fair presentation of the financial statement in accordance with the above law and for internal control.
This will ensure the Provincial Government that the preparation of financial statements is free from material misstatement, whether due to fraud or error.
Upon review, among the idle accounts of the Provincial Government include cash in bank amounting to P370,701; receivables, (P4.04 million); construction material inventory: (P819,879), guarantee deposits, (P86,778), buildings, (P80,846,809.30); and investment in Treasury Bills, (P26,818).
The auditors said that such observation was already raised to the provincial accountant in 2016 annual report, where it was recommended to verify the validity, existence and composition of these balances.
The accountant was also urged to locate source documents or records that can be used to trace back transactions and draw valid adjusting entries.
The auditors also recommended to evaluate and identify accounts that may be covered by COA Circular 2016-005 and request for possible write-off.
But only 0.04 percent movement from the account balances was observed as of Dec 31, 2018, the auditors said.
During the exit conference, the provincial accountant admitted that no request for write-off was made, claiming that reconciliation was quite difficult.”
He said that efforts were previously exerted to locate the source documents, but only few were recovered.
Some of these balances were just carried over from available reports but the source or supporting documents were either lost or burned.
Nevertheless, the accountant assured that the request for write-off will be carried out for fiscal year 2019.
The continuous existence of the unreconciled and unidentified accounts casted doubt on the integrity and reliability of the financial statements, the auditors said.
“Financial statements are not just ordinary reports but valuable records prepared by the management for the benefit of the public and other stakeholders, and for its own guide in decision-making,” read the COA report.
Thus, the auditors said the provincial accountant should endeavor to reconcile and minimize the existence of these balances.
“Best effort should be exerted to write-off eligible accounts and reduce the number of unreconciled balances, in order to fairly present the Provincial Government’s financial statements,” read the COA report.
In the report, the auditors asked the provincial accountant to evaluate and identity eligible idle or unreconciled balances for write-off and comply with the procedures.
The auditors also recommended that the idle and unreconciled subsidiary ledgers balances be properly disclosed.
