2.12 In view of the foregoing, the reported balance of the PPE account in the financial
statements is unreliable.
2.13 We recommended and Management agreed to prioritize the completion of
the one-time PPE cleansing in full compliance with COA Circular No. 2020-
006 by assigning dedicated personnel and temporarily relieving the members
of the Inventory Committee from their regular duties to ensure the timely
execution of all required procedures and to immediately reconcile the results
of the physical count with accounting and property records.
2.14 We further recommended and Management also agreed that upon
completion of the conduct of inventory and preparation of the reports, the
Municipal Mayor file a request for authority to derecognize non-
existing/missing PPEs to the audit team, and support its request with the
certified lists required in Section 8.3 of COA Circular No. 2020-006, to take
full advantage of the one-time cleansing privilege afforded by the
Commission and establish accuracy of its PPE balances reported in the
financial statements.
2.15 Lastly, we recommended and the Inventory Committee agreed to adopt the
uniform numbering system for property numbers of PPE and require the
Property Unit to update the property stickers based on the prescribed format
and to include the required information under the said COA Circular.
Road Networks – No disclosure in Notes to FS - ₱57,192,222.97
3. The absence of disclosures in the Notes to Financial Statements on the Road
Networks account balance of ₱57,192,222.97 contravenes the faithful
representation requirement set forth by the International Public Sector
Accounting Standards (IPSAS) and the reporting guidelines under COA Circular
No. 2015-008, dated November 23, 2015, thereby, depriving users of the financial
statements of access to complete financial information that is crucial for informed
decision-making and for the benefit of its constituents.
3.1 One of the attributes that makes information useful in financial reporting, as
outlined in the “Conceptual Framework for General-Purpose Financial Reporting
by Public Sector Entities” of the IPSAS, is a faithful representation of the economic
and other phenomena that it purports to represent. Paragraph 3.10 of this
framework states that faithful representation is attained when the depiction of the
phenomenon is complete, neutral, and free from material error.
3.2 Furthermore, paragraph 29 of IPSAS 1, in substance, states that fair presentation
also requires an entity to provide additional disclosures when compliance with the
specific requirements in IPSASs is insufficient to enable users to understand the
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