The Commission on Audit (COA) has identified a P25.77-million anomaly in the financial statements of the Tagbilaran City government, citing the understatement of Real Property Tax (RPT) and Special Education Tax (SET) receivables, as well as their corresponding deferred income accounts.
The findings were outlined in Audit Observation Memorandum No. 2024-016, dated April 8, 2024.
COA reported that as of Dec. 31, 2023, the city’s financial records listed RPT and SET receivables at P18.41 million, far below the P44.18 million indicated in the Realty Tax Delinquency Listing prepared by the City Treasurer’s Office.
COA noted that the year-end balances of the receivable accounts were understated by P6.47 million for RPT and P19.29 million for SET.
These errors violate the New Government Accounting System Manual for Local Government Units, which requires accurate recording of receivables using a modified accrual method of accounting.
The audit pointed out several lapses in accounting procedures, including the failure of the City Treasurer to provide a certified list of taxpayers and amounts due at the start of the year.
The City Accountant also did not prepare the required Journal Entry Voucher to correctly record receivables and deferred income accounts.
According to COA, the discrepancies arose because of unrecorded actual receivables and unresolved differences between the records of the City Treasurer and City Assessor.
The ongoing lack of proper reconciliation led to misstatements in the city’s financial statements, affecting the accuracy of its reported income and financial position, COA said.
COA said that the failure to book the full amount of actual RPT and SET receivables distorted the city’s financial reporting.
This practice risks misleading stakeholders and complicates budgetary planning and fiscal management, COA noted.
To address the issue, COA made several recommendations:
Adjusting Entries: The City Accountant should prepare adjusting entries to reflect the correct receivables based on the Tax Delinquency Listing. Receivables for the next fiscal year should be established using the City Assessor’s Assessment Rolls.
Reconciliation of Records: The City Treasurer, City Assessor, and City Accountant were urged to reconcile their records to determine the actual receivables accurately.
Adherence to Standards: All involved offices must ensure compliance with government accounting standards to prevent similar discrepancies in the future.
The City Accountant’s Office said it is ready to implement the recommended adjustments once the City Assessor submits the updated Assessment Rolls.
However, the Assessor’s Office noted that its ongoing efforts to revise property valuations and update records remain a priority due to the general reassessment of real property units in the city.
COA stressed the urgency of resolving the issue, warning that failure to record actual receivables could lead to further financial misstatements.
The P25.77-million discrepancy shows the need for improved accuracy and accountability in Tagbilaran City’s financial management, COA said.