accounts were overstated by the amount of depreciation that should have been
applied to each depreciable PPE item.
1.8 We recommended and the Municipal Treasurer, as the Property and Supplies
Officer, agreed to verify the existence of these PPE items to determine
whether to fully depreciate the PPE or not.
1.9 We further recommended and the Municipal Accountant agreed to make the
necessary adjusting entries to rectify the unrecorded depreciation expense of
the subject PPE items.
1.10 Lastly, we recommended and the Municipal Accountant agreed to recognize
annual depreciation for all items of PPE in accordance with the IPSAS and
COA issuances.
Non-completion of the one-time PPE cleansing - ₱66,016,501.17
2. Due to overlapping workloads and non-compliance with the necessary property
numbering system, the Municipal Government is unable to properly execute and
complete the one-time PPE cleansing required by COA Circular No. 2020-006,
thus, the accuracy of the reported balance of the PPE account at year end, totaling
₱439,554,040.51, which includes movable properties amounting to ₱66,016,501.17,
could not be verified.
2.1 COA Circular No. 2020-006 dated January 31, 2020, was issued to prescribe
guidelines and procedures for inventory taking, recognition of items found at the
station, and the disposition of non-existing or missing Property, Plant, and
Equipment (PPE) items for the one-time cleansing of PPE accounts of government
agencies to establish verifiable PPE balances regarding their existence, condition,
and accountability. The PPE generally comprises a substantial portion of the total
assets of the LGU, thus it is important for Management to properly account for all
of its PPE, whether acquired through purchase or donation, and also including
those constructed by administration or contract.
2.2 The one-time cleansing is a one-time privilege granted to LGUs due to
discrepancies in the PPE account balances of government agencies, which have
become a perennial issue that has caused the non-establishment of the accuracy of
the PPE balances presented in the financial statements.
2.3 As of December 31, 2024, the PPE account reported in the financial statements
showed a total of ₱439,554,040.51, net of accumulated depreciation, which
includes a substantial amount of movable properties valued at ₱66,016,501.17.
However, a review of the Municipal Government’s compliance with the said
circular revealed that they did not complete the necessary procedures to cleanse
their PPE account balances.
2.4 Section 6.0 of COA Circular 2020-006, dated January 31, 2020, outlines the
procedural guidelines for conducting the one-time cleansing of LGUs, which
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