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    AOM 2023-002 Cash in Bank - Abuyog (Reviewed)

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    Kean Fernand Bocabo
    The audit of the Cash in Bank account of the Municipality of Abuyog revealed discrepancies totaling ₱912,793.20 due to unrecorded reconciling items. Specifically, 20 bank accounts were understated in the financial statements compared to adjusted bank reconciliation statements. The understatements were caused by reconciling items like credit memos, erroneous deposits, unrecorded checks, and debit memos that were not adjusted in the accounting records. Failure to record these reconciling items affected the fair presentation of the municipality's financial statements.

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    AOM 2023-002 Cash in Bank - Abuyog (Reviewed)

    Uploaded by

    Kean Fernand Bocabo
    174 views4 pages
    The audit of the Cash in Bank account of the Municipality of Abuyog revealed discrepancies totaling ₱912,793.20 due to unrecorded reconciling items. Specifically, 20 bank accounts were understated in the financial statements compared to adjusted bank reconciliation statements. The understatements were caused by reconciling items like credit memos, erroneous deposits, unrecorded checks, and debit memos that were not adjusted in the accounting records. Failure to record these reconciling items affected the fair presentation of the municipality's financial statements.

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    AOM 2023-002 Cash in Bank- Abuyog (Reviewed)

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    The audit of the Cash in Bank account of the Municipality of Abuyog revealed discrepancies totaling ₱912,793.20 due to unrecorded reconciling items. Specifically, 20 bank accounts were understated in the financial statements compared to adjusted bank reconciliation statements. The understatements were caused by reconciling items like credit memos, erroneous deposits, unrecorded checks, and debit memos that were not adjusted in the accounting records. Failure to record these reconciling items affected the fair presentation of the municipality's financial statements.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    174 views4 pages

    AOM 2023-002 Cash in Bank - Abuyog (Reviewed)

    Uploaded by

    Kean Fernand Bocabo
    The audit of the Cash in Bank account of the Municipality of Abuyog revealed discrepancies totaling ₱912,793.20 due to unrecorded reconciling items. Specifically, 20 bank accounts were understated in the financial statements compared to adjusted bank reconciliation statements. The understatements were caused by reconciling items like credit memos, erroneous deposits, unrecorded checks, and debit memos that were not adjusted in the accounting records. Failure to record these reconciling items affected the fair presentation of the municipality's financial statements.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 4

    REPUBLIC OF THE PHILIPPINES

    COMMISSION ON AUDIT
    REGIONAL OFFICE NO. VIII
    LGAS C – Leyte II and Biliran Province
    New Ormoc City Hall
    Ormoc City, Leyte

    Team R8-03, Abuyog, Leyte

    AOM No.: 2023-002


    Date : May 16, 2023

    AUDIT OBSERVATION MEMORANDUM

    HON. OCTAVIO J. TRAYA, JR.


    Municipal Mayor
    Abuyog, Leyte

    Attention: MICHELLE L. EFREN


    Municipal Accountant

    We have audited the Cash in Bank-Local Currency Current Account of the


    Municipality of Javier and observed the following deficiencies/errors:

    1. The Cash in Bank-Local Currency Current account is understated by at least


    ₱912,793.20 due to unrecorded reconciling items, contrary to Section 111 (2)
    of Presidential Decree No. 1445 Section 3.3 of COA Circular No. 96-011
    dated October 2, 1996, thus, affecting the fair presentation of the
    Municipality’s year-end financial statements.

    1.1. Section 111 (2) of PD 1445 provides that the highest standards of honesty,
    objectivity and consistency shall be observed in the keeping of accounts to
    safeguard against inaccurate or misleading information.

    1.2. Section 3.3 of COA Circular No. 96-011 dated October 2, 1996 states that, “The
    Accountant shall draw journal vouchers to record all valid reconciling items that
    require adjustment and correction in the GL.”

    1.3. The Cash in Bank - LCCA account of the agency is comprised of twenty (20)
    bank accounts and as of December 31, 2022, the balances of the subject account
    in the Statement of Financial Position and the adjusted balances per bank
    reconciliation statements showed an aggregate variance of ₱912,793.20. Details
    are shown in Table 1.

    AOM NO. 2023-002: Cash in Bank-LCCA -Abuyog, Leyte Page 1 of 5


    Table 1. Cash in Bank Balances as of December 31, 2022
    Per Bank Discrepan
    Fund Clusters Account No. Per FS
    Reconciliation cies
    General Fund LBP Account # 0182- 235,953,257.6 235,383,116.01 570,141.61
    4028-93 2
    SEF LBP Account # 0182- 3,902,023.44 3,903,100.79 (1,077.35)
    4039-46
    Trust Fund (Main) LBP Account # 0182- 33,764,420.61 33,711,993.74 52,426.87
    4039-38
    Trust Fund LBP Account # 0182- 163,228.33 163,228.33 -
    (Abuyog Municipal 1049-57
    ARCDP)
    Trust Fund LBP Account # 0182- 167,228.02 167,228.02 -
    (DPWH) 1086-93
    Trust Fund LBP Account # 0182- 39,920.17 39,920.17 -
    (SEDIP) 1049-28
    Trust Fund (TEEP) LBP Account # 0182- 80,394.33 80,394.33 -
    1069-50
    Trust Fund (GTZ- LBP Account # 0182- 83,004.75 83,004.75 -
    CBFM) 1115-97
    Trust Fund LBP Account # 0182- 1,510,856.32 1,510,856.32 -
    (Grassroots 1129-76
    Participatory
    Budgeting Process)
    Trust Fund (RAY) LBP Account # 0182- 14,043.97 14,043.97 -
    1128-95
    Trust Fund LBP Account # 0182- 5,117,891.46 5,117,891.46 -
    (KALAHI CIDDS 1120-20
    KKB)
    Trust Fund LBP Account # 0182- 138,086.31 138,086.31 -
    (Abuyog Rapid 1186-56
    Program)
    Trust Fund (HCI LBP Account # 0182- 2,211,058.62 2,211,058.62 -
    Charges) 1198-73
    Trust Fund LBP Account # 0182- 183,170.67 183,170.67 -
    (Professional Fees 1198-81
    Designated for
    Pooling)
    Trust Fund (ACC- LBP Account # 0182- 1,954,305.21 1,954,305.21 -
    Senior High School 1188-77
    Voucher Program)
    Trust Fund (ACC- LBP Account # 0182- 67,785,878.06 67,494,575.99 291,302.07
    Free Higher 1202-19
    Education)
    Trust Fund (ACC- LBP Account # 0182- 356,625.00 356,625.00 -
    Free Tertiary 1202-27
    Education Subsidy)
    Trust Fund LBP Account # 0182- 30,982.29 30,982.29 -
    (Abuyog Hotel) 1118-30
    Trust Fund DBP Account # 00-0- 2,199,933.05 2,199,933.05 -
    (Abuyog Hotel) 01094-775-2
    Trust Fund DBP Account # 00-0- 4,656,121.50 4,656,121.50 -
    (LDRRMF) 01095-775-9

    AOM NO. 2023-002: Cash in Bank-LCCA -Abuyog, Leyte Page 2 of 5


    Per Bank Discrepan
    Fund Clusters Account No. Per FS
    Reconciliation cies
    GRAND TOTAL 360,312,429.73 359,399,636.53 912,793.20

    1.4. Audit of Cash in Bank revealed that these variances were due to the reconciling
    items as of December 2022 which were not adjusted nor recorded in the books.
    Although the Bank Reconciliations for all the aforementioned bank accounts were
    prepared and submitted, the reliability and accuracy of the Cash in Bank- LCCA
    account could not be relied upon, inasmuch as there were no adjustments made
    for the following reconciling items:

    Table 2. Reconciling Items


    CIB Amount
    Fund Clusters Particulars Understated/
    (Overstated)
    General Fund
    General Fund (LBP Credit Memo as per June 2019 Bank Statement ₱ 410.87
    Account # 0182-4028-93) Unrecorded local check deposit dated. 7/7/22 5,000.00
    Credit Memo as per December 2022 Bank 600,000.00
    Statement
    Reconciling item of Due from Other Fund - 91.33
    Auto Remittance of BIR Sept. 2021- TF
    Debited by the bank, Check # 1896076 (2,971.19)
    Debit Memo (5,000.00)
    Debit Memo per January 2013 Bank Statement (17,874.00)
    Debit Memo per January 2015 Bank Statement (9,515.00)
    Auto remittance for BIR Compensation dated (0.40)
    Nov. 2022 – FH
    Sub-Total- General Fund 570,141.61
    Special Education Fund
    SEF LBP Account # 0182- Over recorded Deposit of Collection, (1,077.35)
    4039-46 10/24/2022
    Sub-Total- Special Education Fund (1,077.35)
    Trust Fund
    Trust Fund (Main)- LBP Erroneous Deposit to SEF Fund Account 42,344.66
    Account # 0182-4039-38 intended for Trust Fund Account, 3/2013
    Credit Memo, 3/2012 Bank Statement 31,429.35
    Credit Memo, Erroneous deposit to SEF 1,077.35
    intended for Trust Fund, 10/25/2022 BS
    Debit Memo, 1/2011 (11,785.71)
    Adjustment for stale check # 3679345 2/1/19 -
    Antonio Fernandez AICS 3,500.00, Ck# (10,638.78)
    36795.20 3/11/2019 1,800.00, Ck# 3680055
    10/15/2019 3,373.13, Ck#4203205
    12/17/2019 740.00, and Ck# 4203225 12/26/19
    1,225.65 ACC.
    Total Trust Fund (Main)- LBP Account # 0182-4039-38 ₱ 52,426.87
    Trust Fund (ACC- Free Credit Memo, 12/31/2022 293,100.00

    AOM NO. 2023-002: Cash in Bank-LCCA -Abuyog, Leyte Page 3 of 5


    CIB Amount
    Fund Clusters Particulars Understated/
    (Overstated)
    Higher Education)- LBP Adjustment for Staled check # 4267682 Dated (1,797.93)
    Account # 0182-1202-19 6/14/2020 Globe.
    Total Trust Fund (ACC- Free Higher Education)- LBP Account # 0182- ₱ 291,302.07
    1202-19
    Sub-Total- Trust Fund ₱ 343,728.94
    GRAND TOTAL ₱ 912,793.20

    1.5. Valid reconciling items found as a consequence of the reconciliation of bank and
    book records should be recorded in the General Journal based on the approved
    Journal Entry Vouchers (JEV) so as to arrive at the correct balance in the books.

    1.6. The non-adjustment of the above net reconciling items amounting to ₱912,793.20
    resulted in an understatement of Cash in Bank–LCCA as of year-end by the same
    amount, consequently affecting the fair presentation of the Municipality’s year-
    end financial statements.

    1.7. We recommend that the Municipal Accountant draw a Journal Entry


    Vouchers to record the valid book reconciling items per Bank Reconciliation
    Statements on the month that they occurred or were detected in order to
    present an accurate and reliable cash balance in the financial statements.

    May we have your comments on the foregoing audit observations within five (5)
    calendar days from receipt hereof.

    MA. SHIELA T. ELMIDO


    State Auditor II
    OIC Audit Team Leader

    SANTIAGO P. SEÑASE
    State Auditor IV
    OIC-Supervising Auditor

    Proof of Receipt of AOM:


    Officer Name of Receiving Officer Signature Date Received
    Municipal Mayor
    Municipal Accountant

    AOM NO. 2023-002: Cash in Bank-LCCA -Abuyog, Leyte Page 4 of 5

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