Notes to the Financial Statements

1. General Information

The financial statements of Barangay XYZ was issued on date. XYZ is located in geographical location,
and the barangay hall is located in address of the barangay. The barangay exercises the functions and
responsibilities necessary for the efficient and effective provision of the following basic services:
agricultural support services; health and social welfare services; services and facilities related to general
hygiene and sanitation, beautification, and solid waste collection; maintenance of katarungan
pambarangay; maintenance of barangay roads and bridges and water supply systems; infrastructure
facilities; information and reading center; and satellite or public market.

2.1 Statement of compliance and basis of preparation

The financial statements have been prepared in accordance with and comply with the Philippine Public
Sector Accounting Standards. The financial statements are presented in Pesos and the figures are rounded
to the nearest pesos.

The financial statements are prepared on the basis of historical cost. The cash flow statement is prepared
using the direct method. The Statement of Comparison of Budget and Actual Amounts is presented
according to the classification adopted for budgeting purposes.

2.2 Summary of Significant Accounting Policies

a. Revenue Recognition

Revenues are recorded when received.

Revenue from non-exchange transactions

Taxes, grants and donations are recognized when taxable/event occurs. Transfers of funds from other
government agencies without specific purpose for which the fund will be utilized are recognized as non-
exchange transactions.

Revenue from exchange transactions

Revenues from fees on issuance of certifications and clearances and other services rendered, sale of goods
are recognized as exchange transactions.

b. Expenses

Expenses are recognized and taken up in the accounts when incurred.

c. Inventories

Inventories are initially recognized at cost. The cost comprise all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present location and condition. The cost of
inventories are assigned following the moving average method and measured at the lower of cost and net
realizable value as at every reporting date. Inventories acquired thru non-exchange transactions are
recognized at its fair value at the time of transfer.

d. Recognition of Liabilities

Liabilities are recognized at the time goods and services are accepted or rendered.

e. Property, Plant and Equipment

Property, plant and equipment are carried at cost less accumulated depreciation. Major repairs, which
extends the life of the asset are capitalized and depreciated together with the asset.

Depreciation is charged on the depreciable value of assets following the straight-line method over the
useful life of the asset.

PPEs are derecognized upon disposal. Any gain or loss arising from the derecognition is recognized in the
surplus or deficit.

f. Public infrastructure

Public infrastructure assets are recorded in the books at cost. Replacement of parts required at regular
intervals is recognized in the carrying amount of the Public Infrastructure when the costs incurred meet
the recognition criteria. The carrying amount of those parts replaced is derecognized.

3. Tax Revenue

20xx 20xx
Tax Revenue - Property xx xx
Tax Revenue – Goods and Services xx xx
Tax Revenue – Permit Fees xx xx
Tax Revenue - Others xx xx
Tax Revenue – Fines and Penalties xx xx
Total xx xx

Tax Revenue – Property represents the 30% share of the barangay from the City’s collection of the basic
real property tax and its penalties.

Tax Revenue – Goods and Services represents the taxes levied by the barangay on stores or retailers with
fixed establishments and the share of the barangay from taxes imposed on quarry resources extracted
within the barangay area.

4. Share from Internal Revenue Collections

This represents the share of the barangay from the40% allocation for the local governments from the
national internal revenue taxes.
5. Share from National Wealth

This represents the share of the barangay in the proceeds derived from the utilization and development of
national wealth within the barangay jurisdiction.

20xx 20xx
Share from National Wealth xx xx

6. Service and Business Revenue

20xx 20xx
Service Income xx xx
Business Income xx xx
Total xx xx

7. Grants and Donations

20xx 20xx
Grants and Donations in Cash xx xx
Grants and Donations in Kind xx xx
Total xx xx

8. Gains

20xx 20xx
Gain on Sale of Property, Plant and xx xx
Equipment
Gain on Revaluation of Biological xx xx
Assets
Total xx xx

9. Personnel Services

a. This includes the cost of personnel services for employees of the barangay
20xx 20xx
Salaries and Wages xx xx
Other Compensation xx xx
Personnel Benefit Contributions xx xx
Other Personnel Benefits xx xx
Total xx xx

b. Remuneration of key management personnel

This represents the honoraria, year-end bonus, cash gift, Other Bonuses and Allowances and
Terminal Leave Benefits of the agency’s key management personnel.
 20xx 20xx
Punong Barangay xx xx
Barangay Kagawads xx xx
SK Representative xx xx
Barangay Treasurer xx xx
Barangay Secretary xx xx
Total xx xx

10. Maintenance and Other Operating Expenses

20xx 20xx
Travelling Expenses xx xx
Training and Scholarship Expenses xx xx
Supplies and Materials Expenses xx xx
Utility Expenses xx xx
Communication Expenses xx xx
Demolition/Relocation and Delisting/ xx xx
Dredging Expenses
Professional Services xx xx
General Services xx xx
Repairs and Maintenance xx xx
Financial Assistance/Subsidy xx xx
Taxes, Insurance Premiums and Other xx xx
Fees
Other Maintenance and Operating xx xx
Expenses
Losses xx xx
Total xx xx

11. Non-Cash Expenses

20xx 20xx
Depreciation xx xx
Impairment Losses xx xx
Loss on Revaluation of Biological xx xx
Assets
Total xx xx

12. Financial Expenses

20xx 20xx
Interest Expenses xx xx
Bank Charges xx xx
Other Financial Charges xx xx
Total xx xx
13. Transfers, Assistance and Subsidy From

20xx 20xx
Subsidy from National Government xx xx
Subsidy from Other Local Government xx xx
Units
Total xx xx

14. Transfers, Assistance and Subsidy To

20xx 20xx
LGU Equity on Other xx xx
LGU/National/Foreign
Funded Projects
Transfer to TF unutilized current year xx xx
allocation for LDRRMF
Transfer of SK allocation to STF xx xx
Subsidies - Others
Total xx xx

15. Cash and Cash Equivalents

Cash and cash equivalents comprise cash in the local treasury, petty cash, cash in bank – local currency
current account and investment in time deposits with term of 3 months or less.

20xx 20xx
Cash – in Local Treasury xxx xxx
Petty Cash xxx xxx
Cash in Bank - LCCA xxx xxx
Investment in Time Deposits xxx xxx
Total xxx xxx

16. Investments

3 months or less 20xx 20xx

Bank Account Number xxx xxx
Bank Account Number xxx xxx
Total xxx xxx

More than 3 months to 1 year 20xx 20xx

Bank Account Number xxx xxx
Bank Account Number xxx xxx
Total xxx xxx

More than 1 year 20xx 20xx

Bank Account Number xxx xxx
 More than 1 year 20xx 20xx
Bank Account Number xxx xxx
Total xxx xxx

Investment in time deposits with term of 3 months or less are presented as part of cash and cash
equivalents (see Note 15)

17. Receivables

20xx 20xx
Accounts Receivable xx xx
Due from Local Government Units xx xx
Advances for Payroll xx xx
Advances to Officers and Employees xx xx
Receivables - Disallowances/Charges xx xx
Due from Officers and Employees xx xx
Due from NGO/POs xx xx
Other Receivables xx xx
Total xx xx

18. Inventories

20xx 20xx
Inventory Held for Sale xx xx
Inventory Held for Distribution xx xx
Inventory Held for Consumption xx xx
Total xx xx

The amount of write-down of inventories recognized as an expense is P_______, which is recognized

under the Inventory expense.

19. Prepayments and Deferred Charges

20xx 20xx
Advances to Contractors xx xx
Other Prepayments xx xx
Total xx xx

20. Investment Property

20xx 20xx
Investment Property - Land xx xx
Investment Property - Buildings xx xx
Total xx xx
21. Property, Plant and Equipment

Cost Land Land Infra. Buildings Machine Transpo. Furniture, Leased Leased Constr Other Total
Improve Assets and Other ry and Equipment Fixtures Assets Assets uct-ion PPE
-ments Structures Equipme and Books Improve- in
nt ments Progre
ss
As to 01/01/xx
Additions
Disposals
Transfers/Adj
As at 12/31/xx
Additions
Disposals
Transfers/Adj

Depreciation
As at 01/01/xx
Depreciation
As at 12/31/xx
Depreciation
Disposals
Transfers/Adj
As at 12/31/xx
Net book values
As at 12/31/xx
As at 12/31/xx

22. Biological Assets

20xx 20xx
Breeding Stocks xx xx
Livestock xx xx
Trees, Plant and Crops xx xx
Aquaculture xx xx
Other Bearer Biological Assets xx xx
Total xx xx

The above balances are stated in net recoverable value. Write downs were treated as expense in the
current year.

23. Financial Liabilities

20xx 20xx
Accounts Payable xx xx
Due to Officers and Employees xx xx
Interest Payable xx xx
Operating Lease Payable xx xx
Finance Lease Payable xx xx
Leave Benefits Payable xx xx
Other Provisions xx xx
Loans Payable - Domestic xx xx
Total xx xx
24. Inter-Agency Payables

20xx 20xx
Due to BIR xx xx
Due to GSIS xx xx
Due to Pag-IBIG xx xx
Due to PhilHealth xx xx
Due to NGAs xx xx
Due to GOCCs xx xx
Due to LGUs xx xx
Total xx xx

25. Trust Liabilities

20xx 20xx
Trust Liabilities xx xx
Guaranty/Security Deposits Payable xx xx
Trust Liabilities - Disaster Risk xx xx
Reduction and
Management Fund (DRRMF)
Trust Liabilities - SK Funds xx xx
Total xx xx

26. Provisions

20xx 20xx
Other Provisions xx xx

27. Other Payables

20xx 20xx
Other Payables xx xx

28. Reconciliation of Net Cash Flows from Operating Activities to Surplus/(Deficit)

20xx 20xx
Surplus/(Deficit) xxx xxx
Non-cash transactions
Depreciation xxx xxx
Impairment Loss xxx xxx
Increase in payables xxx xxx
(Gains) Losses on Sale of PPE xxx xxx
(Gains) Losses on Sale of xxx xxx
Investments
Increase in current assets (xxx) (xxx)
Increase in investments due to (xxx) (xxx)
revaluation
 20xx 20xx
Increase in receivables (xxx) (xxx)
Net Cash from Operating Activities xxx xxx

29. Reconciliation of Comparison of Budget and Actual Amounts and the Statement of Financial
Performance

Reconciliation of Comparison of Budget and Actual Amounts and the Statement of Financial Performance
For the Year Ended December 31, 2015
Income Personnel MOOE Financial Capital
Services Expenses Outlay
Comparison Statement of
Budget and Actual
Entity Differences
Basis Differences:
Income not considered
budgetary items
Non-cash income
Gain on Sale of
Assets
Receipts not considered
as income
Sale of capital assets
Borrowings
Non-cash expenses:
Depreciation
Impairment Loss
Losses
Debt Service (Loan
Amortization)
Interest Expenses
capitalized
Capital Expenditures
Timing Differences:
Prepayments charged to
current appropriations
Unconsumed Inventories
charged to appropriations
Consumed Inventories
and deferred charges
charged to prior period
appropriations

Per Statement of
Financial Performance

30. Others