Annex 40

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 Peso 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

1)_ Revenue Recognition

Revenues are recorded when received.

Revenue from non-exchange transactions

Taxes, fees, grants and donations are recognized when the 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.

2)_ Expenses

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

3)_ Inventories

Inventories are recorded following the asset method, cost at moving average method and
measured at the lower of cost and net realizable value. Inventories acquired thru non-exchange
transactions are recognized at its fair value at the time of transfer.

4)_ Recognition of Liabilities
Liabilities are recognized at the time goods and services are accepted or rendered.

5)_ Property, Plant and Equipment

All property, plant and equipment except donated property without declared value are stated 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. PPEs except public infrastructure which become unserviceable
or no future economic benefit or service potential is expected from its continued use are
transferred to the Other Assets.

6)_ 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.

7)_ Real Property Tax

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

2013 2012
Real Property Tax - Basic xx xx
Penalties xx xx
Total xx xx

8)_ Business Tax

Business tax represents the taxes levied by the barangay on stores or retailers with
fixed establishments within the barangay area.

9)_ Share from Internal Revenue Collections

This represents the share of the barangay from the 40% allocation for the local
governments from the national internal revenue taxes based on the collection of the
third fiscal year preceding the current fiscal year.
2013 2012
Current Year xx xx
PY understatement of IRA xx xx
Total xx xx
10)_ Tax Revenue - Permit Fees

2013 2012
Fees and Charges on commercial breeding of
xx xx
fighting cocks, cockfights and cockpits
Fees and Charges on places of recreation which
xx xx
charge admission fees
Fees and Charges on billboards, signboards, neon
xx xx
signs and outdoor advertisements
Total xx xx

11 )Tax Revenue - Fines and Penalties

2013 2012
Tax Revenue - Fines and
xx xx
Penalties- Property
Tax Revenue - Fines and
xx xx
Penalties- Goods and
Services
Tax Revenue - Fines and
xx xx
Penalties- Others
Total xx xx

12)Shares, Grants and Donations

2013 2012
Share from National Wealth xx xx
Tax Revenue - Grants and
xx xx
Donations in Cash
Grants and Donations in Kind xx xx

13) Service and Business Revenue

2013 2012
Clearance and Certification
xx xx
Fees
Other Service Revenue xx xx
Total xx xx

14) Salaries and Wages

__
a. Employees
This includes the cost of personal services for employees of the barangay

2013 2012
 Salaries and Wages - Regular xx xx
Salaries and Wages -
xx xx
Casual/Contractual
Personal Economic Relief
xx xx
Allowance (PERA)
Clothing/Uniform Allowance xx xx
Subsistence Allowance xx xx
Productivity Incentive
xx xx
Allowance
Year End Bonus xx xx
Cash Gift xx xx
Other Bonuses and
xx xx
Allowances
Retirement and Life Insurance
xx xx
Premiums
Pag-IBIG Contributions xx xx
PhilHealth Contributions xx xx
Employees Compensation
xx xx
Insurance Premiums
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.

2013 2012
Punong Barangay xx xx
Barangay Kagawads xx xx
SK Representative xx xx
Barangay Treasurer xx xx
Barangay Secretary xx xx
Total xx xx
15 ) Revenue - Fines and Penalties

2013 2012
Office Supplies Expenses xx xx
Accountable Forms Expenses xx xx
Food Supplies Expenses xx xx
Welfare Goods Expenses xx xx
Drugs and Medicines
xx xx
Expenses
Fuel, Oil and Lubricant
xx xx
Expenses
Other Supplies and Materials xx xx
 Expenses
Total xx xx

16) Utility Expenses

2013 2012
Water Expenses xx xx
Electricity Expenses xx xx
Total xx xx

17) Communication Expenses

2013 2012
Postage and Courier Services xx xx
Telephone Expenses xx xx
Internet Subscription
xx xx
Expenses
Cable, Satellite, Telegraph
xx xx
and Radio Expenses
Total xx xx

18) Demolition/Relocation and Desilting/Dredging Expenses

2013 2012
Demolition and Relocation
xx xx
Expenses
Desilting and Dredging
xx xx
Expenses
Total xx xx

19) Professional Services

2013 2012
Auditing Servicesl xx xx
Consultancy Services xx xx
Other Professional Services xx xx
Total xx xx

20) General Services

2013 2012
Environment/Sanitary
xx xx
Services
Janitorial Services xx xx
Security Services xx xx
 Other General Services xx xx
Total xx xx

21) Repairs and Maintenance

2013 2012
Repairs and Maintenance -
xx xx
Land Improvements
Repairs and Maintenance -
xx xx
Infrastructure Assets
Repairs and Maintenance -
Buildings and Other xx xx
Structures
Repairs and Maintenance -
xx xx
Machinery and Equipment
Repairs and Maintenance -
xx xx
Transportation Equipment
Repairs and Maintenance -
xx xx
Furniture and Fixtures
Repairs and Maintenance -
xx xx
Leased Assets
Repairs and Maintenance -
xx xx
Leased Assets Improvements
Repairs and Maintenance -
Other Property, Plant and xx xx
Equipment
Total xx xx

22) Financial Assistance/Subsidy

2013 2012
LGU Equity on Other
LGU/National/Foreign Funded xx xx
Projects
Transfer to TF unutilized
current year allocation for xx xx
LDRRMF
Transfer of SK allocation to
xx xx
STF
Subsidies - Others xx xx
Total xx xx

23) Taxes, Insurance Premiums and Other Fees

2013 2012
Fidelity Bond Premiums xx xx
 Insurance Expenses xx xx
Total xx xx
24) Other Maintenance and Operating
Expenses

2013 2012
Advertising Expense xx xx
Representation Expenses xx xx
Transportation and Delivery
xx xx
Expenses
Rent/Lease Expenses xx xx
Membership Dues and
xx xx
Contributions to Organizations
Subscription Expenses xx xx
Donations xx xx
Other Maintenance and
xx xx
Operating Expenses
Advertising Expense xx xx
Total xx xx

25) Financial Expenses

2013 2012
Interest Expenses xx xx
Bank Charges xx xx
Other Financial Charges xx xx
Total xx xx

26) Depreciation Expense

2013 2012
Depreciation - Land
xx xx
Improvements
Depreciation - Infrastructure
xx xx
Assets
Depreciation - Buildings and
xx xx
Other Structures
Depreciation - Machinery and
xx xx
Equipment
Depreciation - Transportation
xx xx
Equipment
Depreciation - Furniture,
xx xx
Fixtures and Books
Depreciation - Leased Assets xx xx
Depreciation - Leased Assets xx xx
 Improvements
Depreciation - Other Property,
xx xx
Plant and Equipment
Total xx xx

27) Losses

2013 2012
Loss on Sale of Propery,
xx xx
Plant and Equipment
Loss on Sale of Assets xx xx
Loss of Assets xx xx
Loss on Revaluations xx xx
Total xx xx
28) Cash and cash equivalents

Cash and cash equivalents comprise cash

in the local treasury and cash in local
treasury current and time deposit accounts.

2013 2012
Cash - In Treasury xx xx
Petty Cash xx xx
Cash in Bank - Local
xx xx
Currency, Current Account
Cash in Bank - Local
xx xx
Currency, Time Deposits
Total xx xx

29) Receivables

2013 2012
Accounts Receivable xx xx
Due from Local Government
xx xx
Units
Receivables -
xx xx
Disallowances/Charges
Due from Officers and
xx xx
Employees
Other Receivables xx xx
Total xx xx

30) Inventories

2013 2012
 Inventory Held for Distribution: xx xx
Food Supplies for
xx xx
Distribution
Welfare Goods for
xx xx
Distribution
Drugs and Medicines
xx xx
for Distribution
Other Supplies and
Materials for xx xx
Distribution
Inventory Held for
xx xx
Consumption:
Office Supplies
xx xx
Inventory
Accountable Forms,
Plates and Stickers xx xx
Inventory
Construction Materials
xx xx
Inventory
Other Supplies and
xx xx
Materials Inventory
Total xx xx

Amount of inventories recognized during the period totaled P__________.

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

is recognized under the Inventory expense.

31) Property, Plant and Equipment

Build Furn
Mach
ings iture,
inery Transp Lea
Land Infrastr and Fixtu
La Improv ucture Othe and ortation sed To
Cost res
nd ements Assets r Equi Equipm Ass tal
and
pmen ent ets
Struc Boo
t
tures ks
As at
01/01/
12
Additio
ns
Dispos
als
Transf
ers/Adj
As at
12/31/
12
Additio
ns
Dispos
als
Transf
ers/Adj
As at
12/31/
13
Depre
ciatio
n
As at
01/01/
12
Depre
ciation
As at
12/31/
12
Depre
ciation
Dispos
als
Transf
ers/Adj
As at
12/31/
13
Net
book
values
As at
12/31/
12
As at
12/31/
13