Misclassification of Withholding Tax as Interest Expense
Pulilan · 2022
Severity: ModerateRecommendation: Unknown
What Happened?
Category: Financial ManagementIssue: Non-complianceThe municipality recorded tax taken out of its bank interest as an interest expense. This is incorrect because it's a tax, not a cost of borrowing.
Why It Matters
Recommended Actions
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Original Audit Finding Excerpt
"Interest Expenses are federal income tax deducted from the Municipality’s interest income earned from Landbank of the Philippines."
