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