Because there was no written procedure for handling receivables, the agency made errors in reporting its receivables, and the accuracy of the reported amounts is questionable.

Why It Matters

Recommended Actions

• Fast track the preparation of the accounting manual that will serve as a guide for each personnel and/or responsible Unit/Office to cautiously comply with proper and systematic recording, reporting, and monitoring of beneficiaries’ transactions aligned with the provisions of applicable International Public Sector Accounting Standards (IPSAS). Require the Sector Office/Regional Office/District Office (SO/RO/Dos) and Corporate Operations and Systems Development Department (COSDD) to: Strictly comply with the timely submission of the required Billing and Collections System (BCS) generated reports such as Group Award (GA)/Sales Report (SRs), Schedule of Rebates, Schedule of Balances (SOBAL) and Aging Reports (AR) to Accounting Department - Branch Accounting and Property Division (AD-BAPD)
• And Facilitate the inclusion of accounts that are not only demandable and in arrears/past due, but also those demandable within the next 12 months after the reporting period, and those not yet demandable for each project in the consolidated ARs while the COSDD is currently enhancing the system. Require the Accounting Department (AD) to: Ascertain the complete recording of the GA/SRs by checking the sequential series of the approved GA/SRs, as well as the cancelled awards and Schedule of Rebates for each project prior to the preparation of the Sales Register (SREG)
• Design a periodic monitoring report for SO/RO/DOs to ensure the provision of complete and accurate beneficiaries’ transactions and verify the account balances against SOBAL and ARs to check the reliability of accomplished monitoring report
• Assign accounting personnel who will be responsible for the reconciliation of the recorded receivables balances per project against the SOBAL and AR monitoring reports to keep track of any unrecorded transactions and misclassification of accounts as Current and Non-current assets
• Adjust and/or refrain from using the Accumulated surplus to correct errors in adjusting accounting estimates, pursuant to Paragraphs 37 to 41 of IPSAS 3
• Coordinate immediately with the COSDD to enhance the BCS, ensuring the inclusion of controls on all reports needed by the SO/RO/DOs for monitoring purposes and submit them to AD for recording
• And Restate the comparative information for prior period to reflect prior year adjustments, unrecorded income and expenses, and disclose the nature and amount of any adjustments. Require the COSDD to fast track the enhancement of BCS-generated aging reports and other reports to ensure reliable reporting of financial information and to attain fair presentation in the FS.

Original Audit Finding Excerpt

"Moreover, the absence of a manual on the manner of recording, reporting, and monitoring of NHA’s receivable transactions resulted in several lapses in the presentation of the Receivables account balances totaling P64.691 billion and P47.050 billion as at December 31, 2023 and 2022, respectively. This rendered doubtful the balances of the Receivables and related accounts."

Source Document