Consolacion fails to account P4M; COA wants receipts

CEBU, Philippines - The Municipality of Consolacion failed to properly account and record their properties under the Special Education Fund (SEF) which led to an overstatement of the plant, properties and equipment accounts of the municipality.

According to the observation of the Commission on Audit (COA) the properties acquired out of the 1 percent real property tax under SEF for various elementary and secondary schools were not covered with turnover receipt documents, amounting to P4, 256, 808.52, which was actually used and turned over to the school.

In the 2010 COA annual audit report, the amount was not dropped from the book of accounts contrary to the existing accounting principles of recording government properties.

The COA pointed out a provision in Republic Act 7160 which states that a province, city or a municipality may levy and collect an annual tax of one percent on the assessed value of real property which shall be in addition to the basic real property tax. The proceeds shall exclusively accrue to the SEF, which shall be automatically released to the local school boards.

“The annual school board budget shall give priority to the construction, repair and maintenance of school buildings and other facilities of public and secondary schools, among others,” the COA report read.

COA said that the existing rules and regulations on the recording of transactions requires recording of transferred assets to the agency where the property is located and used.

The municipality through the local school board implemented projects and procured property plant and equipment out of the SEF to the intended beneficiary schools but COA discovered that the accounts remained in the books of the municipality instead of transferring them to the books of the recipient schools who actually have the possession, which violates the existing rules and regulations in recording asset accounts of the government.

The properties intended for the various public schools are the land improvements, office buildings, furniture and fixtures, and office equipment.

The municipal accountant justified that it would need much time to retrieve the data and documents to the accounts and transactions but COA suggested to the accounting department to use Memorandum Receipt or acknowledgement receipt.

“We recommend that the Accountant and the Municipal Treasurer who is the property officer of the agency should coordinate in identifying properties recorded under SEF and retrieve documents and prepare journal entries with corresponding turn-over receipt transferring these accounts and properties to the recipient schools,” the COA report read.

The COA also recommended that all property accounts in the financial statements should be supported with subsidiary ledger records to be maintained by the property officer and the accounting division. – (FREEMAN)