NOTES TO FINANCIAL STATEMENTS

1. AGENCY PROFILE
2.
The Municipality of Kumalarang, was created by virtue of Executive Order No. 356,
signed by President Carlos P. Garcia on August 28,1959. It was originally named
KUMALADANG. In 1916 the Americans modified it into Kumalarang. Located in western
portion of Zamboanga del Sur. It is the 26 th municipality of the Province of Zamboanga del Sur
under the 2nd congressional district, composed of 18 barangays.

It is a 4th class municipality with a land area of 17,245.1360 hectares which represent
about 0.21% of the total land area of Zamboanga del Sur. It is characterized by a mixed
topography. The northern portion is covered with hills and mountains with forest resources and
open grassland, while the southern portion is occupied by swamp and mangrove area which is
suitable for fishpond products for crab, prawn and bangus production. The central portions are
scattered valleys and plateaus where agriculture is prominent for lowland rice and corn farms.

3. BASIS OF FINANCIAL STATEMENT PRESENTATION

 The Financial Statements have been prepared in accordance with generally

accepted state accounting principles and standards.

 Accounts were reclassified to conform to New Chart of Accounts prescribed

under COA Circular No. 2004-008 dated September 20, 2004.

4. SIGNIFICANT ACCOUNTING POLICIES

 The LGU uses accrual method of accounting. All expenses are recognized when
incurred and reported in the Financial Statements in the period which they relate.
Income is on accrual basis except for the transactions where accrual is impractical
or when law requires other methods.

 Cost of inventories was based on perpetual inventory methods and record cost
using the moving average method. Previous year’s inventory balance was
recorded under first-in-first-out method.

 Property, Plant and Equipment is carried at historical cost. Infrastructures under

construction are valued using the construction period theory. The cost of public
infrastructure, such as roads, bridges and other infrastructures for general public
use are not carried in the books.

 The straight line method of depreciation is used in computing of depreciation

expenses based on the estimated useful life of the assets. Depreciation is not being
set-up for property, Plant and Equipment acquired prior to CY 2002.

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  Share from the Internal Revenue Collections are accounted for under accrual
method and Real Property Taxes are accounted under modified accrual method of
accounting. All other taxes, fees, charges and other revenues are accounted using
the cash method of accounting.

4. Correction of Fundamental Errors

 Fundamental errors of prior years are corrected using Prior Year’s Adjustment
account and at the end of the year it will closed to Retained Earning Operating
surplus account and then to Government Equity.

5. Cash and Other Cash Accounts

This account is broken down as follows:

 
2012 2011
 
Cash in Vault P 3,016,360.85 P 2,904,198.03
Cash Collecting Officer - -
Petty Cash Fund 303,165.43 303,165.43
Payroll Fund 3,193,106.78 7,103,384.24
Cash in Bank-LCCA 12,191,577.09 5,145,216.38
Cash in Bank - LCSA 5,400.00 5,400.00
Total P 18,709,610.15 P 15,461,364.08

a. Cash in Vault includes balance of Php1,322,730.32 under the accountability of the

previous Municipal Treasurer, Sahal M. Dakula, who already retired from the
government service although not yet cleared by the LGU; for reclassification to Other
Account Receivable;

6. Receivables

This account includes the following:

2012 2011

Accounts Receivables P 6,697,704.78 4,605,812.68

Loans Receivable 351,456.38 351,456.38
RPT/SET Receivable 846,531.12 5,857.50
Interest Receivable 46,439.42 46,439.42
Due from GOCCs 55,687.23 55,687.23
Due from NGO 131,063.60 131,063.60
Due from Other Fund 532,450.97 2,544,484.84
Receivables-Disallowance 423,672.43 423,672.43
Advances to Officers and 730,338.67 467,211.29

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 Employees
Other Receivables 344,241.53 340,570.25
Totals P 10,159,586.13 P 8,972,255.62

 Accounts Receivable represents accrued income from Economic Enterprises not yet
paid by General Fund
 Loans receivable consist of loans granted to NGO’s and PO’s (KEMPCO, IFAMUCO
and SOFEMCO).
 Real Property tax receivable which were not collected during the year, amount of
which was based on RPTAR submitted by the treasurer to the Accounting Office.
 Interest receivable were interest income from loans granted to NGO’s and PO’s
 Due from GOCC’s were over payment of GSIS contribution which is pending for
reconciliation.
 Receivables – disallowances/charges were receivables disallowances charges of the
accountable officers.
 Advances to officers and employees represents cash advances, which remained
unliquidated.
 Other receivable comprise of various loans granted and loans payable by employees.

7. Inventories

This account includes the following:

2012 2011
Merchandise P 80,170.20
Office Supplies P 38,420.00 38,420.00
Accountable forms 0
Medical, dental & laboratory 40,000.00
Gasoline, Oil & Lubricants
Inventory 600.00 600.00
Textbooks 20,745.30 20,745.30
Other Supplies 923,686.17 870,097.80
Construction materials 55,201.50 55,201.50
Livestock 18,000.00 18,000.00
Other agri., fishery 33,816.05 33,816.05
Total P 1,090,469.02 P 1,157,050.85

8. Prepayments

This account includes the following:

2012 2011
Advances to contractors P 865,896.38
Deferred Charges 38,805.99 38,805.99

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 Other prepaid expenses 100,000.00 100,000.00
Total P 1,004,702.37 P 138,805.99

9. Property, Plant and Equipment

This account consists of:

Balance Net Addition/ Balance

Dec. 31,2011 (reduction) Dec. 31,2012
Land 1,307,045.00 78,125.00 1,385,170.00
Land Improvements 4,735,967.72 4,735,967.72
Electric and Power Struc. 72,292.00 72,292.00
Buildings 45,135,453.39 255,605.00 45,391,058.39
Office Equipt., Fur. & Fix. 4,375,796.29 327,602.90 4,703,399.19
Machineries & Equipt. 8,372,116.13 657,924.51 9,030,040.64
Transportation Equipt. 5,578,204.78 5,578,204.78
Other Prop., Plant & Equipment 327,000.00 327,000.00
Public Infrastructures 1,565,248.14 49,446,082.33 51,011,330.47
Construction in Progress 70,592,443.47 (30,950,143.16) 39,642,300.31
Total 141,989,274.92 19,887,488.58 161,876,763.50
Less:
Accumulated Depreciation (8,035,026.68) (1,574,281.18) (9,609,307.86)
Net Amount 133,954,248.24 18,313,207.40 152,267,455.64

10. Other Assets

This account consists of:

2012 2011
Work/other animals P 200,000.00 P 200,000.00
Breeding Stocks 15,750.00 15,750.00
Items in Transit 51,382.73 51,382.73
Other Assets 2,880,332.39 2,880,332.39
Total P 3,147,465.12 P 3,147,465.12

This account consist of items pending for disposition and those property, plant and
equipment, which still used in the operation without depreciable value, it also include burned
items pending receipt for relief of accountability.

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11. Current Liabilities

This account consists of:

2012 2011
Payables
Accounts Payable P 4,943,976.48 P 4,736,160.56
Inter-Agency Payables
Due to Officers 62,800.62 251,111.31
Due to BIR 3,201,520.50 3,657,428.04
Due to GSIS 1,101,013.26 738,829.52
Due to Pag-ibig 233,005.39 131,854.86
Due to Philhealth 3,010,522.19 1,575,832.21
Due to other NGAs 2,762,118.72 5,896,545.73
Due to LGUs 2,015,622.24 7,816,592.02
Intra-Agency Payables
Due to Other Funds 13,945,316.21 35,871,129.90
Other Liabilities
Guaranty deposits 1,801,284.34 4,103,145.26
Performance/bidders/bond 0.00
Other Payables 1,272,931.64 851,368.95
Total P 34,350,111.59 P 65,629,998.36

Due to other fund is net of Due from Other Fund in the amount of P2,544,484.84
which is subject for reconciliation.

12. Long-term Liabilities

2012 2011
Loans Payable-Domestic P 23,603,799.76 P 15,455,063.52
Other long-term Liab. 4,218.12 4,218.12
Total P 23,608,017.88 P 15,459,281.64

13. Deferred Credits

This account consists of:

2012 2011
Deferred RPT Income P 919,518.90 P 11,088.00
Other Deferred Credits 89,634.55 603,547.65
Total P 1,009,153.45 P 614,635.65

Represents undistributed collection of RPT accruing to 2008 and liability account in

booking up the RPT.

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14. Government Equity

This account consists of:

2012 2011
Beginning balance P 81,127,274.25 P 66,630,653.15
Adjustment to Beg. Balance 8,971,058.06 160,200.00
Adjusted Beg. Balance 90,098,332.31 66,790,853.15
Add/deduct:
Retained Operating Surplus 20,961,097.97 18,200,940.23
Prior Year’s adjustments 16,513,058.87
Transfer to registry (3,864,519.13)
Other adjustment (160,483.64)
Government equity, ending balance P 127,412,005.51 P 81,127,274.25

15. Income

The following are the income accounts:

2012 2011
Amusement Tax 1,000.00
Business tax 92,098.88 0.00
Community tax 155,362.85 162,185.42
Real Property Tax 330,780.79 278,879.86
Special Education 326,079.16 339,794.84
Fines and penalties
Sub- total Local Taxes P 905,321.68 P 780,860.12
Weight and measure 560.00 3,035.00
Franchising and Licensing Fees 5,962.59
Permit fees 153,364.97 111,021.27
Registration fees 75,319.00 68,340.00
Other permit fees 187,354.22 260,456.86
Sub-total Permit and Licenses P 416,598.19 P 448,815.72
Athletic & Cultural Fees 1,277.00 0.00
Clearance 104,267.08 225,576.24
Garbage 15,915.00 29,408.00
Inspection 960.00
Library Fees 600.00
Medical, dental 44,740.00 39,507.00
Processing fees 200.00 430.00
Toll and terminal 178,060.00 324,725.00
Transcript of Records Fees 27,854.20
Other service income 120.00
Sub-total Service Income P 372,913.28 P 620,726.24

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 Cemetery operation 0.00
Market 426,622.50 29,202.00
Slaughterhouse 46,525.00 8,820.00
Printing and Publication Income 3,390.00
Rent income 212,987.80 999,767.50
Tuition Fees 686,792.46 466,202.02
Other business income 4,050,345.48 2,569,245.23
Sub-total Business Income P 5,426,663.24 P 4,073,236.75
Subsidy from Other Funds 245,276.99
Grants & Donation 9,016,015.97 6,718,372.43
Interest income 3,748.81 3,536.98
IRA 51,712,716.00 52,435,222.00
Share from PAGCOR 32,250.17 44,510.10
Miscellaneous 363,906.00 152,913.54
Other fines and penalties 0.00
Sub-total Other general income P 61,373,913.94 P 59,354,555.05
Totals P 68,495,410.33 P 65,278,193.88

16. Expenses

The following are the expense accounts:

2012 2011
Salaries & Wages – Reg. Pay 19,414,588.38 18,682,972.04
Salaries & Wages - Casual 2,989,978.00 2,575,200.00
Salaries & Wages - Contractual 874,400.00 1,276,605.36
PERA 431,150.00 405,233.87
ADCOM 1,501,450.00 1,431,701.61
Representation 1,072,800.00 1,064,250.00
Transportation 1,072,800.00 1,064,250.00
Clothing/uniform 340,000.00 320,000.00
Subsistence, Laundry & Quarter Allow. 154,950.00 43,550.00
Productivity incentive 0.00
Other Bonuses 0.00
Honoraria 1,053,130.00 777,310.00
Hazard 569,227.60 315,452.60
Longevity 35,000.00 19,441.00
Overtime and night pay 26,992.60 0.00
Cash gift 425,000.00 405,000.00
Year end bonus 1,645,450.50 1,592,860.00
Life and Retirement 2,285,632.01 2,239,897.84
PAG-IBIG 389,578.67 375,997.91
PHILHEALTH 209,075.00 198,700.50

ECC contribution 92,500.80 105,692.32

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Terminal leave 131,336.00 159,429.14
Health worker 0.00
Other Personnel benefits 58,300.00 478,625.96
SUB-TOTAL PS P 34,773,339.56 P 33,532,170.15
Traveling Expenses- Local 1,669,500.91 1,838,761.77
Training expenses 10,000.00 149,026.00
Scholarship Expenses 0.00
Office Supplies Expense 322,572.55 211,041.78
Accountable Forms Expenses 36,498.19 89,829.30
Animal/Zoological Supplies Expense 50,057.00
Drugs & Medicines Expenses
Medical, Dental & Lab. Supplies 40,000.00 0.00
Gasoline and oil 13 985,674.30 1,421,315.43
Text & Ins. Materials Expenses 2,635.00
Agricultural 8,185.00
Other Supplies Expenses 238,540.78 973,749.50
Water 107,695.00 112,466.55
Electricity 633,932.71 688,139.99
Postage and Deliveries 1,190.00 1,245.00
Telephone Expense - Landline 6,223.77
Telephone Expense - Mobile 222,124.49 119,492.33
Internet Expenses 345,759.80 53,314.84
Cable, Satellite, Telegraph & Radio Exp. 2,300.00 3,050.00
Membership Dues 0.00
Advertising expense 0.00
Printing and Binding Expense 29,479.25 0.00
Rent Expenses 464,000.00
Representation Expenses 1,761,258.35 1,072,363.01
Transportation and Deliveries Expense 0.00
Survey Expense 6,800.00
Auditing Services 28,501.00 30,995.00
Environment/sanitary 0.00
General Services 1,210,975.42 0.00
Security Services 163,166.00 142,500.00
RM – Hospital & Health Center 65,160.00
RM – Market & Slaughter 60,240.00
RM - Other Structures 83,020.00
RM - Office Buildings 0.00
RM - School Building 0.00
RM - Office Equipment 850.00 22,938.00
RM – IT Equipment 6,650.00

RM – Communication Equipt. 3,050.00

RM – Construction & Heavy Equip. 18,440.00
RM - Other Machineries and Equip. 790.00 0.00

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RM - Motor vehicles 409,822.40 1,207,903.25
RM - Roads Highways & Bridges 82,080.00
RM - Parks, Plaza & Monument 0.00
Donations 142,500.00
Confidential Expenses 130,000.00 0.00
Intelligence Expenses 0.00
Miscellaneous Expenses 0.00
Taxes, Duties & Licenses 19,560.24 13,252.12
Fidelity Bond Premiums 9,075.00 15,600.00
Insurance Expense 284,183.13 447,808.47
Depreciation - Office Buildings 14 90,000.00 90,000.00
Depreciation – Hospitals & Health Cntr. 15,000.00 15,000.00
Depreciation – Mrket. & Slaughter 778,726.66 778,726.66
Depreciation – Other Structure 432.00 270,432.00
Depreciation - Office Equipment 67,373.33 67,373.33
Depreciation – Furniture & Fixture 2,859.75 2,859.75
Depreciation - IT Equipment 171,928.07 171,928.07
Depreciation – Library Books 1,912.73 1,913.73
Depreciation - Machineries 6,300.00 6,300.00
Depreciation - Communication 24,322.57 24,322.57
Deprn. - Const. & Heavy Equip. 460,320.00 460,320.00
Depreciation - Firefighting 0.00
Depreciation - Technical 4,906.56 4,906.56
Depreciation - Other Machinery 32,996.76
Depreciation - Motor Vehicles 160,110.00
Discount on RPT 19,948.41 12,622.05
Other MOOE 1,090,441.36 129,655.00
Sub - Total MOOE P 12,485,665.96 P 11,732,553.59
Bank charges 598.50 0.00
Documentary stamp 0.00
Interest expense 274,708.34 481,416.07
Other financial charges 170.84
Sub-Total Financial Expenses P 275,306.84 P 481,586.91
TOTAL EXPENSES P 47,534,312.36 P 45,746,310.65

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