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SiPAT

Borrowing costs charged to expense instead of capitalized

Baliwag City · 2023

Severity: HighRecommendation: Unknown

What Happened?

Category: Financial ManagementIssue: Non-compliance

The city borrowed money to build a public market and transport terminal. The interest on that loan was recorded as an expense instead of being added to the cost of the buildings. This makes the buildings look cheaper than they really are and inflates expenses, which is not the correct accounting treatment.

Why It Matters

Recommended Actions

No recommendations are available for this finding yet.

Original Audit Finding Excerpt

"Borrowing costs/interest payments on above loan were charged to expense and not capitalized."

Source Document

09-Baliwag2023_Part1-Notes_to_FS.pdf

Baliwag City · 2023 AAR · 13 files