Appendix 15

NOTES TO FINANCIAL STATEMENTS

(Disclosure Checklist Applicable to National Government Agencies)

I. GENERAL
Note 1 Basis of Reporting

Name of the Agency whose financial statements

are being presented.

Description of the nature of the Agency's

operations
and
its
principal
programs/projects/activities.

Whether the statements have been prepared in

accordance with generally accepted state accounting
principles and standards.

Inclusions in the consolidated financial

statements like transactions of the Regional Offices
and Operating Units, as the case maybe.
Note 2 Significant Accounting Policies

Change in Accounting Policies

Allowance for doubtful accounts is

maintained at a level adequate to provide for
potential uncollectibility of receivables. A
review of the receivables, designed to identify
accounts to be provided with allowance, is made
on a regular basis.

The costs of ending inventory of office

supplies and materials and other inventory items
are
computed using the Moving Average
Method.

Property, Plant and Equipment are carried at

cost less accumulated depreciation and
obsolescence. For assets under construction, the

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Construction Period Theory was applied for

costing purposes. Related expenses incurred
during the construction of the project were
capitalized and those incurred after the
construction formed part of the operating cost.
Bonus paid to contractors for early completing
the work was added to the total cost of the
project and those projects where liquidated
damages charged and paid for by the contractor
was deducted from the project cost.

The Straight Line Method of depreciation is

used in depreciating the Property, Plant and
Equipment with estimated useful lives ranging
from five to ten years. A residual value
computed at 10 percent of the cost of asset is set
and depreciation starts on the second month
after purchase.

Properties of the government which are used

by the general public are accounted for under the
Public Infrastructures/Reforestation Projects.
These are dropped from the Property, Plant and
Equipment account and recorded in the Registry
of Public Infrastructure Projects/Reforestation
Projects. These are not subject to depreciation.

Payable accounts are recognized and

recorded in the books of accounts only upon
delivery of the goods/inventory/other assets and
rendition of services to the agency.

Change in accounting treatment

Accounts were reclassified to conform with the
new Chart of Accounts prescribed under the
New Government Accounting System.
Transactions in foreign currencies are recorded
in Philippine Peso based on the BSP rate of

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exchange prevailing at the date of transactions.

At the end of the year, these are revalued using
the rate of exchange at Balance Sheet date.
Foreign currency denominated monetary assets
and liabilities at balance sheet date are restated
based on BSP exchange rate at that date.

Correction of fundamental errors.

Fundamental errors of prior years are corrected
by using the Prior Years Adjustments account.
Errors affecting current years operation are
charged to the current years accounts.

Note 3 Subsequent Events

Non-adjusting events after the balance sheet date
which are so significant that non-disclosure would
affect the ability of the users of the financial
statements to make proper evaluation and decisions
have to be disclosed by stating the nature of the
event and an estimate of its financial effects.

Information received after the balance sheet date

about conditions that existed at that date have to be
stated to update the disclosures made.

II. Balance Sheet

Note 4 - Cash and Other Cash Accounts
Included in the cash accounts as of December 31, 20__
are deposits on escrow of Pxxx.x million for the account
of agency.
Note 5

Receivables
This account consists of:

Dec. 31 Dec. 31
200_
200_
( In Millions)

Accounts Receivables
Pxxx

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P xxx

Less: Allow. for Doubtful Accounts

xx
Net Amount
xxx
Due from Officers and Employees xxx

Due from NGAs

xxx
Due from NGOs/POs
xxx
xxx

Disallowances/Charges
xxx
Total
Pxxx

xx
xxx
xxx
xxx

xxx
Pxxx

The account Due from Officers and Employees

consists mainly of the amount granted as cash advances
for traveling expenses - Local subject to liquidation.
Note 6 - Inventories
This account consists of:
Office Supplies Inventories
Accountable Forms Inventory
Medical, Dental and Lab.
Supply Inventory
Merchandize Inventory
Other Inventory Items
Total

Pxxx
xxx

P xxx
xxx

xxx
xxx
xxx
Pxxx

xxx
xxx
xxx
P xxx

Note 7 - Property Plant and Equipment

This account consists of :
Land
Pxxx
Land and Land Improvement
xxx
Leasehold Improvements
xxx
Office Equipment
xxx
Furniture and Fixtures
xxx

IT Equipment and Software

xxx
xxx
Total Book Value
xxx
Less: Accumulated Depreciation xxx
Net Book Value
Pxxx

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xxx
xxx
xxx
xxx
xxx
xxx
xxx
Pxxx

Property, Plant and Equipment are carried at cost

less accumulated depreciations. The Constructed Period
Theory is used for costing the assets.
Regular maintenance, repair and minor replacements
are charged against Maintenance and Other Operating
Expenses (MOOE) as these were incurred.

III. STATEMENT OF INCOME AND EXPENSES

Note 8 Subsidy Income from National Government
For this year, Notice of Cash Allocation (NCA)
amounting to Pxxx.xx was received from the
Department of Budget and Management for payment of
expenses for operational requirements and liabilities.
Note 9 Income and Expenses
Income and expenses recorded in the books of
accounts amounted to Pxxx.xx and Pxxx.xx,
respectively.

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