CoA questions SC’s ‘irreconcilable funds’

The Commission on Audit yesterday said it found hard to reconcile the Supreme Court’s (SC) P1.234-billion year-end balance in its Local Currency, Current Account (LCCA), calling the amount “inaccurate and unreliable.”

The CoA noted its comparison of balances in 41 bank accounts owned by the SC as the Land Bank of the Philippines (LBP) revealed a discrepancy of P404,740,917.74 per books and per bank.

“Due to the foregoing deficiencies, the account Cash in Bank–LCCA totaling P1,234,131,852.24 as of December 31, 2017 was inaccurate and unreliable,” the CoA said.

The CoA also observed the inclusion of four closed bank accounts with a net debit balance of P248,098,535.07.

“Four closed accounts with a total net debit balance of P248,098,535.07 remained recorded in the books. But (these are) confirmed closed by the bank, thereby overstating the year-end balance of the Cash in Bank — LCCA account by the same amount,” the agency said.

The CoA also noted adjustments and closing of nine inactive accounts with a net amount of P17,418,569.97 without supporting documents.

The CoA emphasized that under Item III C.4 of Circular 97-001, the agency should request for write-off or adjustments of these accounts. The request should be supported by documents if no action has been done to clear the accounts of abolished agencies because the books of accounts, financial statements/schedules and documents needed to validate the accounts are no longer available.

According to the report, the SC previously requested for authority to write-off dormant balances of account Cash in Bank-LCCA amounting to P129,926,414.79 and negative P129,752,966.17 in the SC accounts but was denied by government auditors.

CoA advised SC to make an adjusting/closing entry by drawing the corresponding Journal Entry Voucher supported by documents. But “the necessary reconciliation of the affected accounts and the documentation or support of the recorded transactions shall be submitted or identified first by management,” it said.

“Verification of the Subsidiary Ledgers of Cash in Bank-LCCA account disclosed that 10 dormant SC bank accounts and those of the Lower Courts (LC) with balances of P733,476,581.27 and negative P661,243,482.91, respectively, or a total net debit balance of P72,233,098.36, were adjusted/closed in the net credit amount of P17,418,569.67 but not duly supported by documents,” the CoA stated.

Part of the unreliable balances were inactive accounts and non-interest bearing bank accounts for Continuous Form Check (CFC) with P267,917,630.43.

After further review of the Schedule of the Cash in Bank-LCCA account and the General Ledger, CoA discovered the continued existence of the accounts named after different courts and used to fund the salaries and wages of court employees prior to the implementation of the Automated Payroll System in May 2014.

CoA said that the Chief of Office of the Financial Management Office, Office of the Court Administrator requested for advice on disposing of the unused CFC due to Automated Payroll System implementation. They also wrote to LBP asking for possible return of unused checks but LBP found the checks obsolete after the implementation of Check Image Clearing System.

“With the implementation of the Automated Payroll Systems, the CFC checks were no longer issued but the CFC funds remain deposited in the bank without interest since these are Payroll accounts,” the CoA said.

Incorrect deduction of P6,062,186.59 from the bank balance in the Bank Reconciliation Statement (BRS) was also disclosed upon verification with ATM Payroll Fund account.

CoA said it represents the payments to employees from 2011 to 2017 which were withheld pending submission of the required documents.

“The disbursements were erroneously deducted from the bank balance instead of reverting/adding them back to the book balance resulting in the understatement of the Cash in Bank LCCA account,” the CoA said.

The audit agency also noted that the SC implemented the recommended adjustments in the 2016 Management Letter.

Upon verifying the Bank Reconciliation Statement, there were also P79,887,840.48 unrecorded book reconciling items and stale checks amounting to P898,598.84 found.

The amount was composed of unrecorded debit memo, unrecorded reverted payroll, unrecorded deposits/fund transfers, unrecorded disbursements, unrecorded interests, book errors and other adjustments.

Moreover, the stale checks were said to be included as outstanding checks and not cancelled and/or restored to Cash in Bank-LCCA in contrast with the foregoing provision of the Government Accounting Manual, Volume I, causing the understatement of accounts Cash in Bank-LCCA and the Accounts Payable.

Lastly, three dormant and unconfirmed bank accounts containing a net debit balance of P15,240.22 were still recorded in the books.

The account names of the bank accounts were Contingent Assets, LBP (balance forwarded) and UNDP.

The audit agency recommended SC to reconcile the difference between the balances per books and per bank of the bank accounts in Cash in Bank-LCCA account and affect the necessary adjustments in the books.

The SC further commented that most of these discrepancies cannot be adjusted due to the absence of supporting documents.

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