REPUBLIC OF THE PHILIPPINES

COMMISSION ON AUDIT
REGIONAL OFFICE NO. VIII
LGAS C –Leyte II and Biliran Province
New Ormoc City Hall
Ormoc City, Leyte

Team R8-03, Abuyog, Leyte

AOM No.: 2023-003

Date : May 17, 2023

AUDIT OBSERVATION MEMORANDUM

Hon. Octavio J. Traya, Jr.

Municipal Mayor
Abuyog, Leyte

Attention: Ms. Michelle L. Efren

Municipal Accountant

We have audited the Accounts Payable account of the Municipality of Abuyog

and observed the following deficiencies/errors:

1. Liabilities to Officers and Employees for salaries, benefits and other

emoluments as of December 2022 totaling ₱3,034,985.34 were erroneously
recorded as Accounts Payable instead of Due to Officers and Employees
contrary COA Circular No 2015-009, thus the Accounts Payable was
overstated by ₱3,034,985.34 while Due to Officers and Employees was
understated by the same amount at year end.

1.1. COA Circular No. 2015-009 dated December 1, 2015 prescribed the Revised
Chart of Accounts for LGUs to conform with the adoption of the Phil. Public
Sector Accounting Standard (PPSAS). On recording of liabilities, the following
account was prescribed to be used by LGUs:

Due to Officers and Employees 2-01-01-020

Credit

This account is used to record incurrence of liability to officers and employees

for salaries, benefits and other emoluments. Debit this account for settlement or
payment to officers and employees.
Accounts Payable 2-01-01-010
Credit

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 This account is used to record receipt of goods or services on account in the
normal course of trade and business operation. Debit this account for payment
or settlement of liabilities.

1.2. Review on the additions to Accounts Payable account as of December 2022

revealed that liability to Officers and Employees totaling ₱3,034,985.34 were
erroneously recorded in Accounts Payable account instead of Due to Officers and
Employees as follows:

Table 1. Liabilities to Officers and Employees

Date Particulars Reference Amount
General Fund      
To adjust accounts payable-
12/31/22 Subsistence Allowance 10AJE 99,870.00
To adjust accounts payable-
12/31/22 Laundry Allowance 11AJE 8,430.00
To adjust accounts payable-
12/31/22 Hazard Pay 12AJE 191,776.00
To adjust accounts payable-
12/31/22 Overtime and Night Pay 13AJE 92,205.17
To adjust accounts payable-
12/31/22 Salaries and Wages-Regular 7AJE 14,771.77
To adjust accounts payable-
12/31/22 Representation Allowance 8AJE 175,500.00
To adjust accounts payable-
12/31/22 Transportation Allowance 9AJE 175,500.00
Trust Fund      
To adjust accounts payable-
12/31/22 Salaries and Wages-Regular GJ 347,472.39
To adjust accounts payable-
Salaries and
1,146,956.20
12/31/22 Wages-Casual/Contractual GJ
To adjust accounts payable-
Personal Economic Relief
12,181.60
12/31/22 Allowance (PERA) GJ
To adjust accounts payable-
12/31/22 Representation Allowance GJ 67,500.00
To adjust accounts payable-
12/31/22 Transportation Allowance GJ 67,500.00
To adjust accounts payable-
12/31/22 Honoraria GJ 363,609.77
To adjust accounts payable- 215,0
12/31/22 Overtime Pay GJ 48.44
To adjust accounts payable-Year- 16,6
12/31/22 End Bonus GJ 64.00
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 Date Particulars Reference Amount
To adjust accounts payable-Other 40,0
12/31/22 Bonuses and Allowances GJ 00.00
Total 3,034,985.34

1.3. Due to the above noted deficiency, the Accounts Payable account was overstated
by ₱3,034,985.34 while the Due to Officers and Employees account was
understated by the same amount at yearend.

1.4. We recommend that the Municipal Accountant make the necessary

adjustments for the above erroneous entries and record the liabilities to
officers and employees using the Due to Officers and Employees account.

May we have your comments on the foregoing audit observations within five (5)
calendar days from receipt hereof.

MA. SHIELA T. ELMIDO

State Auditor II
OIC Audit Team Leader

SANTIAGO P. SEÑASE
State Auditor IV
OIC Supervising Auditor

Proof of Receipt of AOM:

Name of Receiving
Officer Signature Date Received
Officer
Municipal Mayor
Municipal Accountant

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