Audit Findings on the Financial Statement of Rosario, La Union and its

Recommendation for the year ended 2019

Angelica S. Navarro

Submitted in partial fulfillment for the Bachelor of Science in Accountancy in

the Contemporary Issues in Accounting II

College of Accountancy

Philippine College of Northwestern Luzon

San Antonio, Agoo, La Union

March 2021
 Table of Contents

I. Synopsis of the Report…………….…… 1

II. Key Facts……………………………..... 1-2

III. Main Problem…………………………... 2

IV. Sub Problem………….………………… 2

V. Alternative Solutions………………….. 3

VI. Chosen Alternative…………………….. 3

VII. Recommendation……………………..... 3-4

VIII. Reflection…………….…………………. 5

IX. Commission on Audit- Rosario Report…... 6-16

Synopsis of the Report

Municipality of Rosario is a 1st class municipality in the province of La Union. There are

projects that help the community to improve their quality of life and as years go by, the

collections from Other Service Income, Parking Fees, Receipts from Slaughterhouse Operations,

and Garbage Fees is getting higher and it is evident that the town is also developing. The year

ended of 2019, a financial, compliance, performance and revenue audit is conducted to the

financial statement of Municipality of Rosario, La Union in which it was focused to the different

audit areas issued by the Local Government Sector. Unfortunately, the Commission on Audit

rendered a qualified opinion on the 2019’s Financial Statement of Rosario and detected an

erroneously of P2, 449,703.55 in Prior Period Adjustment (PPA) account and P215, 121.51 in

Other Income account, and overstated the Assets/Expense and Accounts Payable accounts

amounting to P9,155,790.41, and misstatement of P125,200,089.96 in the Cash in Bank – Local

Currency Current Account and P3,279,664.98 in Accounts Payable.

Key Facts

 Municipality of Rosario has a qualified opinion regarding their Financial Statements in

the year 2019.

 The Municipal Accountant must submit the list or schedule and documentary

requirements to support the Accounts Payable.

 The Municipal Accountant is responsible for the deposit slips and disbursement vouchers

of the transactions.

 The General Services Officer is responsible for the report on the physical count of PPE.

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  Real Property Tax Receivable, Special Education Tax Receivable Accounts, Deferred

Real Property Tax Income and Deferred Special Education Tax Income should be fairly

presented in the Financial Statement.

 Inter-Agency Receivable must present in the Financial Statement.

Main Problem

 What lead the commission on Audit to issue a Qualified Opinion?

Sub-Problem

1. How can you ensure that the balance of RPT Receivable, SET Receivable, Deferred RPT

and Deferred Set Accounts are properly present in the Financial Statement?

2. How can you fairly present the Inter-Agency in the Financial Statement?

3. What are the ways to avoid delayed submission of contracts into the auditor?

4. How can you ensure the existence of the government procurement?

5. What are ways to avoid splitting of requisitions?

6. How can a development fund be utilized the proper prioritization and planning the

PPA’s?

7. What should management to avoid misappropriation or loss of government fund?

8. What are the ways to maintain the strengthened of NDRRMC?

9. How can establish and maintain the Gender and Development (GAD) Database?

10. What should the Gender and Development (GAD) Committee avoid the expenditures in

seminars or workshop?

11. What will be the result if the Representation Expense was indicative high spending on

reception and entertainment?

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Alternative Solutions

1. With the guide of Commission on Audit recommendations implement the probable

amount of Prior Period Adjustment and Income Accounts and in order to substantiate the

amount of the Accounts Payable.

2. Through the audit from the Prior Period Adjustment and Income Accounts make a proper

reconciliation for it.

3. Restatement of Financial Statement for the year 2019.

Chosen Alternative

Upon the recommendation of COA last year, implement a plan in Prior Period

Adjustment and Income Accounts and reconcile to prove the findings and make an adjustment to

ensure that the transactions are properly recorded.

Recommendation

1. They will establish the amount due and collectible for the year and the certified list

showing the name of taxpayers.

2. In order to fairly present the Inter-Agency Receivable, the management could take

necessary action for the proper write-off/derecognition of dormant accounts.

3. Management should submit the contracts, including all documents in order to

immediately communicate deficiencies noted.

4. The management provides the advertising and posting of the invitation to bid or request

for expression of interest and the BAC, shall post the procurement opportunity in the

PHILGEPS.

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5. Management should properly separate the transactions from the same supplier and date

posting.

6. To achieve the desirable socio-economic development and environmental management

for the benefit of the constituents.

7. According to COA, that a cash advance shall be reported on as soon as the purpose for

which it was granted has been served. The management request for write-offs taking into

consideration guidelines.

8. To facilitate the Local Government Unit (LGU) should have information relative to the

Disaster Risk Reduction for reference and basis for analysis in order to guide local

decision makers and addressing appropriately and accurately the probable measures

before, during and after the calamities.

9. In establishing gender related issues and concerns availability of existing

data/information as regards sex-disaggregation is one of the most important mechanisms

which among the identified gender issues and concerns are most critical that needs

attention and immediate appropriate action.

10. Management should limit the approval of attendance that are held too far from the

locality, especially for seminars that are not specialized and select capable individuals

among the municipal personnel to represent the municipality.

11. Resulting in the wastage of public funds that could have been allocated for a more

beneficial programs or projects for its constituents.

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Reflection

Municipality of Rosario was envisioned as the an adobe of rapid economic

development, where people enjoy and live in an ecologically balanced and healthy

environment under the regime of peace, equality, justice and prosperity administered by

faithful, loyal, obedient, responsible ethical and sincere leaders guided by divine

providence. And received many awards and recognition, but when reading and

understanding the audit report issues by the Commission on Audit, the Rosario facing a

lot issues in accounting. Most of the issues that the COA detected that the officers in

charge of the projects are neglecting their duties are the Prior Period Adjustment and

Other Income Account was erroneously used in the accounts, and they overstated the

Asset/Expense and Account Payable accounts and also they misstatement the Cash in

Bank – Local Currency Current Account and the Account Payable. If the problem will

continue, the public welfare will be affected. As soon as possible they will immediately

take an action regarding the issues.

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