1.10.3. The Municipal Accountant and the Municipal Treasurer reconcile the
accounting and property records and make the necessary adjustments
so that the accounts can be fairly presented in the financial statements.
1.11. During the exit conference, the Municipal Treasurer updated the Audit Team that he
conducted the inventory per office and submitted the report to the Office of the
Municipal Accountant. However, the reconciliation was not completed yet. The
Municipal Accountant suggested that a separate committee be formed specifically
for the reconciliation.
1.12. The Municipal Mayor resolved that a separate committee will be formed to
undertake the reconciliation of records consisting of members from all offices of the
Municipality in order to complete the one-time cleansing of PPEs. Furthermore,
disposal will also be undertaken upon the appraisal of various unserviceable PPEs.
Property, Plant, and Equipment under the Trust Fund
2. Property, Plant, and Equipment (PPE) under the Trust fund totaling ₱17,379,465.70
were not transferred to the General Fund nor provided with depreciation
allowances contrary to Sections 97 and 104 (i) on the Manuals on the NGAS for
LGUs Volume I, Paragraph 71 of IPSAS 17 and COA Circular No. 2015-008 dated
November 23, 2015, thus resulting in the understatement of the PPE accounts and
depreciation expenses in the General Fund.
2.1. Section 97 on the Manuals on the New Government Accounting Systems for Local
Government Units (LGUs) Volume I provides that:
“Project Expenditures. – The construction period theory shall apply for
expenditures on infrastructure projects of the Trust Fund. For other projects,
expenditures shall be debited to the appropriate expenditure account.
Expenditures shall be closed to Project Equity account at year-end or upon
project completion, whichever comes first.”
2.2. Moreover, Section 104 (i) of the Manuals on the New Government Accounting
System requires that completed projects under the Trust Fund be transferred to the
General Fund upon submission of full liquidation to the grantor. These completed
projects charged to the funds held in trust by the Municipality are then recorded in
their respective Property, Plant, and Equipment (PPE) accounts.
2.3. As to the depreciation of PPE, paragraph 71 of the International Public Sector
Accounting Standard (IPSAS) 17 states:
“Depreciation of an asset begins when it is available for use, i.e. when it is in
the location and condition necessary for it to be capable of operating in the
manner intended by management. Depreciation of an asset ceases when the
53
