1.6. Our verification of the CIP accounts under the TF as of December 31, 2024,
showed that at least 33 completed projects, with a total cost of ₱207,195,565.98,
remained erroneously recorded under the CIP–Infrastructure Assets and CIP–
Buildings and Other Structures accounts, as summarized in the table below. The
detailed list of these projects is presented in Appendix 1.
Name of Account No. of Projects Trust Fund
CIP–Infrastructure Assets 27 ₱ 80,972,987.11
CIP–Buildings and Other Structures 6 ₱126,222,578.93
Total 33 ₱207,195,565.98
1.7. These projects were completed within the year but not transferred to the GF’s PPE
accounts as required. This resulted in an overstatement of CIP–Infrastructure Assets
by ₱80,972,987.11 and CIP–Buildings and Other Structures by ₱126,222,578.93
under the Trust Fund, with a corresponding understatement of the GF’s PPE
accounts and related depreciation expenses.
1.8. Similarly, at least 153 completed projects under the GF, totaling ₱42,292,425.04,
were not transferred to the appropriate PPE accounts and remained incorrectly
recorded in the CIP accounts. This included ₱39,360,553.23 under CIP–
Infrastructure Assets and ₱2,931,871.81 under CIP–Buildings and Other Structures,
as shown in the summary below. The details are presented in Appendix 2.
Name of Account No. of Projects Trust Fund
CIP–Infrastructure Assets 113 ₱ 39,360,553.23
CIP–Buildings and Other Structures 40 ₱ 2,931,871.81
Total 153 ₱ 42,292,425.04
1.9. During our inquiry, the Municipal Accountant explained that several of the CIP
entries were carried over from prior years and were already present when she
assumed office in CY 2022. She acknowledged the need to correct these balances
and stated that the transfer to the appropriate PPE accounts, along with the
computation of depreciation, would be done following a planned one-time data
cleansing.
1.10. As a result of these deficiencies, the CIP-Infrastructure Assets and CIP-Buildings
and Other Structures accounts under the General Fund were overstated by at least
₱39,360,553.23 and ₱2,931,871.81, respectively. Consequently, depreciation
expenses were understated, leading to understated Accumulated Depreciation
accounts and an overstated surplus account.
1.11. Management is reminded that timely capitalization of CIP is an essential accounting
procedure, as capitalizing completed projects ensures the recognition of
corresponding depreciation expenses in accordance with the matching principle of
accounting.
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