Professional Documents
Culture Documents
IX
Cabatangan Hills, Zamboanga City
Qualified Opinion
We have audited the financial statements (FS) of Isabela City Water District (ISAWAD),
Isabela City, Basilan Province, which comprise the Statement of Financial Position as at
December 31, 2021, and the Statement of Comprehensive Income, Statement of
Changes in Equity, and Statement of Cash Flows for the year then ended, and notes to
the FS, including a summary of significant accounting policies.
In our opinion, except for the effects of the matters described in the Bases for Qualified
Opinion section of this Report, the accompanying FS present fairly in all material
respects, the financial position of ISAWAD as at December 31, 2021, and its financial
performance, its changes in equity, and cash flows for the year then ended in
accordance with Philippine Financial Reporting Standards (PFRS).
1. The reported year-end balance of Cash In Bank Local Currency Savings of P224,788
is non-existent and remained recorded in the books and non-moving for a period of
20 years caused by unavailability of records/documents and non-preparation of Bank
Reconciliation Statement contravening PD 1445.
3. The reliability of the year-end balance of Other Assets account totaling P423,340 is
affected due to the undetermined carry-forward balance totaling P416,723. Likewise,
used construction materials and fees totaling P6,617 were charged to Other Assets
instead of the appropriate expense accounts.
4. The accuracy and completeness of the year-end balance of the Property, Plant and
Equipment and the Accumulated Depreciation accounts totaling P216,959,629 and
P87,781,963, respectively, cannot be ascertained due to non-reconciliation of
Accumulated Depreciation balances between the GL and Lapsing Schedule with
total variance of P366,132, and negative balance of P38,276 and P99,692 of the
Accumulated Depreciation of Communication Equipment and Military, Police and
Security Equipment accounts, respectively.
5. The reported balance of the inventory account is overstated by P90,829 as
compared to the result of the physical count conducted at year end due to the
adoption of specific identification method, and complexities and unnecessary
procedures in inventory management.
6. The accuracy of the reported Due from Officers and Employees balance is doubtful
due to the unreconciled negative balance of P6,251 from prior years.
7. The validity and existence of the Customers’ Deposits Payable account remained
doubtful due to its negative balance of P5,409 with no supporting documents to
substantiate the account.
Except for the matter described in the Bases for Qualified Opinion section, we have
determined that there are no other key audit matters to communicate in our report.
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with PFRS, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
Those charged with governance are responsible for overseeing the District’s financial
reporting process.
Our objectives are to obtain reasonable assurance about whether the FS as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISSAIs will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these FS.
COMMISSION ON AUDIT
EILEEN W. BARREDO
State Auditor IV
OIC- Supervising Auditor
April 8, 2022