Unrecognized Income from Material Testing Fees
Department of Public Works and Highways · 2024
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What Happened?
Category: Financial ManagementIssue: Non-complianceThe agency performed material tests for contractors but didn't bill or record the fees owed until the contractor paid. This meant that the income earned from those tests was not shown in the financial statements for the year, even though the work had already been done.
Why It Matters
Recommended Actions
No recommendations are available for this finding yet.
Original Audit Finding Excerpt
"Accordingly, the deficiencies noted in the implementation of prescribed process and recording have led to incomplete and inaccurate recognition of revenue which is not in line with Paragraph 19 of IPS AS 9, wherein the standard requires that revenue be recognized by reference to the stage of completion of the transaction at the reporting date when the outcome of the transaction can be estimated reliably. As a result, the Other Service Income and Account s Receivable accounts were both understated by P360,660.00 as at December 31, 2024."