CEBU, Philippines – The Commission on Audit questioned the validity of various dormant asset accounts of Mandaue totalling P28.6 milllion.
"The validity of the dormant accounts totalling P28.6 million, which are carried in various assets accounts, are doubtful due to a lack of subsidiary records contrary to Section 12 of the New Government Accounting System (NGAS)...," read COA's observation on the city's operations in 2014.
Section 12 of the manual on NGAS mandates the keeping of a subsidiary ledger (SL) for details or breakdown of the balance of bank accounts.
"Postings for the SL generally come from the source documents...The totals of the SL balances (should) generally be reconciled with their respective control accounts regularly or at the end of each month," the observation report read.
Based on records, the city's dormant accounts since 2004, as of December 2014, were P324,687.93 from Due from LGUs account, P82,922 from Merchandise Inventory, P5,000 from Investment in Bonds, and P781,512.73 from Items in Transit.
Since 2009, under Loans Receivables, the city also has a P37,970.88 balance; for Office Supplies Inventory, it also had a balance of P747,168.16.
The Construction Materials Inventory also posted a P2.2 million balance which has remained inactive since that same year, and P23.7 million for "Other Assets."
All these accounts were under Trust Fund.
COA, however, said that since the Accounting Department "could not provide" supporting documents or schedules to supposedly validate these accounts, they can not ensure the "correctness" and "propriety" of these postings.
"The presence of dormant accounts shows inadequate review of account balances resulting to unreliable data presented in the financial statements of Mandaue City," said COA.
COA already issued a memorandum on this to the city last February 23.
During the exit conference, the Accounting Department reportedly promised COA it will request the Department of General Services for the status of all the inventory items whether these are still existing and usable, or they will have to issue a certification that these are already used or not usable anymore.
Also, the department told COA that there are certain processes that they will have to follow to close dormant accounts in Trust Fund and assured that they will make necessary adjustments to their entries and verify these dormant accounts.
"We further recommend a regular review of all account balances so that dormant accounts can immediately be identified and acted upon," COA told the city. (FREEMAN)