Capitol’s P212.17-M account balances ‘unreliable’ – COA

By: Gerome Dalipe

SOME account balances in the financial statements of the Iloilo Provincial Government amounting to P212.17 million might be “unreliable,” state auditors found.

That’s because several accounts in the Capitol’s financial statements contained dormant or non-moving, unidentified and unsupported subsidiary ledger balances as of Dec. 31, 2018, amounting to P212,178,021.92,

This can prevent the Provincial Government from confirming the existence, valuation, and rights of these accounts. Thus, the obligations could not be validated and rendered, making account balances unreliable.

“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 Commission on Audit’s (COA) report on the Capitol in 2018.

The Philippine Public Sector Accounting Standards (PPSAS) provides that “the objective of financial reporting by public sector entities is to provide information about the entity that is useful to users of General Purpose Financial Reports for accountability and for decision-making purposes.”

The Provincial Government is responsible for the preparation and fair presentation of the financial statements like internal control.

This will allow the Capitol to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

A review of the Capitol’s existing balances showed only one account with minimal movement. The other accounts, on the other hand, were non-moving, rendering vital balances as idle or dormant, unreconciled, and unidentified.

State auditors recommended to the provincial accountant to verify the validity and existence of the balances in their audit observation memorandum.

But only 0.04 percent movement from the account balances were observed as of Dec. 31, 2018, the auditors said, citing the provincial accountant.

The provincial accountant said they did not make a request for write-off reconciliation because it was “quite difficult.”

But the accountant said that all efforts have been exerted to locate the source documents, but only a few were recovered.

Sec. 7 of COA Circular 2016-005 (Rules and Regulations on Settlement of Accounts) provides that the accountant is obliged to conduct regular and periodic verification, analysis and validation of the existing account.

“The continuous existence of the unreconciled and unidentified accounts exhibited non-compliance with this obligation, which cast doubt on the integrity and reliability of the financial statements,” read the 2018 COA report.

Any erroneous information can mislead the user and may result in misinterpretations and eventually wrong decisions, the auditors pointed out.

Thus, the provincial accountant should endeavor to reconcile and minimize the existence of these balances, taking into consideration the available remedies authorized by-laws, rules and regulations, the auditors said.

In the report, the auditors asked the governor to direct the provincial accountant to observe his responsibilities enumerated in COA Circular 2016-005.

The accountant was also urged to evaluate and identify eligible idle or dormant and unidentified subsidiary ledger balances for write-off and comply with the procedures provided in the existing circular.

Likewise, the auditors also asked to disclose the existence of idle or dormant account balances in the notes to the financial statements for the benefit of the management, public and other stakeholders.