BUREAU OF FISHERIES AND AQUATIC RESOURCESNOTES TO FINANCIAL STATEMENTS

December 31, 2002

1. General/Agency Profile

The Bureau of Fisheries and Aquatic Resources, created through RA 8550 - The Philippine Fisheries Code of 1998, as line bureau of Department of Agriculture, the main function of which is to promote the development, conservation, management, protection and utilization of fisheries and aquatic resources is tasked to provide economical, efficient and effective fisheries services to fishpond operators, fishermen and other members of the community, implements fishery laws and policies, plans and programs, and inspect fishery demonstrations farms, nurseries, fishery projects and fishery stations.

2. Basis of Financial Statements Presentation

The Bureau of Fisheries and Aquatic Resources Consolidated Financial Statements have been prepared in accordance with the generally accepted state accounting policies. The Consolidated Financial Statements also include transactions of fourteen (14) Regional Offices and seven (7) Regional Fisheries Training Center.

3. Significant Accounting Policies

3.1 A modified accrual basis of accounting is used. All expenses shall be recognized when incurred and reported in the financial statements in the period to which they relate. Income is on accrual basis except for transactions where accrual basis is impractical or when other methods are required by law.

3.2 Notice of Cash Allocation (NCA) is recorded in the Regular Agency (RA) books as well as those income/receipts which the agency is authorized to use.

3.3 Income/receipts which the agency are not authorized to use and are required to be remitted to the National Treasury are recorded in the National Government (NG) Books.

3.4 The Modified Obligation System is used to record allotments received and obligations incurred. Separate registries are maintained to control allotments and obligations for each class of allotment.

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3.5 Supplies and Materials purchased for inventory purposes are recorded using the Perpetual Inventory System.

3.6 Petty Cash Fund (PCF) accounts is maintained under the Imprest System. All replenishments are directly charged to the expense account. The PCF is not used to purchase regular inventory items for stock.

3.7 For assets under construction, all related expenses incurred during the construction of the project are capitalized and those incurred after the construction are charged against the operating cost.

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

3.9 Payable accounts are recognized and recorded in the books of accounts only upon acceptance of the goods/inventory/other assets and rendition of services to the agency.

3.10 Accounts were reclassified to conform with the new Chart of Accounts prescribed under the New Government Accounting System.

4. Correction of Fundamental Errors

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

5. Cash

The Cash in Bank-Local Currency Account includes the fund transfers of P159,577,219.56 from various National Government Agencies, P38,133,333.33 of which is already due and demandable while the balance of P122,443,886.23 will be deposited to the Bureau of Treasury.

6. Due from National Treasury

The amount of P390,424.02 from Central Office of Cash-National Treasury, MDS account is closed to Due from National Treasury account. The said amount pertains to the NCA received for the deposited performance/bidders bonds which is not yet refunded to the contractors.

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7. Property, Plant and Equipment

Property, Plant and Equipment are carried at cost less accumulated depreciation. The Construction 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.

8. Reversion of unused NCA

The reversion of unused Notice of Allocation (NCA) of P45,916,425.83 comprises of P32,047,599.41 from Central Office, (Fund 101 & 102). The remainder of P13,868,826.42 pertains to Regional Offices' unused NCA.

9. Reciprocal Accounts

Subsidy to Regional Offices P 558,135,774.51Subsidy to Operating Units 46,849,621.00

Total 604,985,395.51Subsidy from Central Office 607,534.082.76

Difference P 2,548,687.25

The difference is a result of entries made by the Regional Offices and Regional Fisheries Training Center (Operating Units) which are not yet recorded in Central Office Books. The difference comprises of the amount P928,697.45 which pertains to fixed asset transferred by the Central Office and an amount of P1,619,989.80 which pertains to the unobligated balance of allotment covered by the funding check.

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