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SiPAT

Misclassification of Withholding Tax as Interest Expense

Pulilan · 2022

Severity: ModerateRecommendation: Unknown

What Happened?

Category: Financial ManagementIssue: Non-compliance

The 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

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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."

Source Document

09-Pulilan2022_Part1-Notes_to_FS.pdf

Pulilan · 2022 AAR · 12 files