AUDIT OBSERVATIONS AND RECOMMENDATIONS
A. FINANCIAL AND COMPLIANCE AUDIT
One-Time Cleansing of Property, Plant, and Equipment
1. The one-time cleansing of the Property, Plant, and Equipment (PPE) account
amounting to ₱449,640,288.56 as of December 31, 2024, was not yet implemented by
the Municipality due to their failure to complete the physical count and to reconcile
the count with the books, contrary to pertinent provisions of COA Circular No.
2020-006 dated January 31, 2020, thereby the existence of movable properties
amounting to ₱52,486,842.32, net of accumulated depreciation and the accuracy of
the PPE balances cannot be ascertained, affecting the fair presentation of these
accounts in the financial statements.
1.1. The existence of enormous amounts of discrepancies in PPE account balances of
government agencies has become a perennial issue and caused the uncertainty of
the accuracy of the PPE balance presented in the financial statements. Such
conditions, if not properly addressed, would invariably cause an exception on the
fairness of the presentation of the financial position of government agencies and
will deprive the government of reliable and useful information for decision-making
and accountability of these assets.
1.2. COA Circular No. 2020-006 dated January 31, 2020, was issued prescribing the
guidelines and procedures on inventory-taking, recognition of those found at
station, and disposition of inexistent/missing PPE items for the one-time cleansing
of PPE accounts of government agencies to establish PPE balances that are
verifiable as to existence, condition and accountability.
1.3. Section 5.1 of the said circular states that “Each government agency shall conduct a
physical count of all its PPE, whether acquired through purchase or donation,
including those constructed by administration and found at station.”
1.4. As of December 31, 2024, the Agency Action Plan and Status of Implementation
submitted by the Municipality disclosed that the inventory process remained
incomplete. Our interviews and verification indicated that while an Inventory
Committee had been established and an initial count conducted, the process was not
finalized. Additionally, ledger cards and stock cards have been maintained;
however, due to the pending completion of the one-time data cleansing, these
records remain incomplete and lack the required accuracy.
1.5. The audit team appreciates the LGU’s preliminary activities in their commitment to
fully implement the provisions set forth in the aforementioned circular. However,
as of December 31, 2024, a complete physical count of properties was not yet
conducted.
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