Borrowing costs charged to expense instead of capitalized
Baliwag City · 2023
Severity: HighRecommendation: Unknown
What Happened?
Category: Financial ManagementIssue: Non-complianceThe 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."
