5.12 We recommended and Management agreed that the City Engineer and City
Accountant designate personnel to oversee the verification of project
completion under the 20% EDF, through comprehensive review and
retrieval of relevant documents to facilitate the timely liquidation process
and ensure accurate recording of completed projects.
5.13 We further recommended and Management agreed that the City
Accountant, in coordination with the CEO, CGS Officer, and City Budget
Officer obtain the required documentation of the identified completed
projects amounting to ₱45,718,667.86 and effect the necessary adjustments
to reclassify completed projects into their appropriate PPE accounts while
recognizing the corresponding depreciation for each completed project.
Semi-expendable properties totaling ₱45,600,127.26 still included in the PPE account
6. Tangible items below ₱50,000.00, accounted as semi-expendable property,
totalling ₱45,600,127.26, are included in the PPE account due to the non-
implementation of the change in accounting policy retroactively, inconsistent with
COA Circular No. 2024-006 dated March 14, 2024, thus, affecting the fair
presentation of the PPE account in the financial statements.
6.1 Section 4.1 of COA Circular No. 2022-004 dated May 31, 2022, provides that
tangible items that meet the definition criteria of PPE but cost is below ₱50,000.00
shall be accounted for in the books of accounts of the agencies as semi-expendable
property.
6.2 On March 14, 2024, the Commission issued COA Circular No. 2024-006,
providing supplemental guidelines on the implementation by Local Government
Units (LGUs) of COA Circular No. 2022-004 dated May 31, 2022. Section 3.3
thereof prescribes that tangible items which meet the definition and recognition
criteria of PPE, but with cost below ₱50,000.00, shall be accounted for in the
books of accounts as inventory under the appropriate semi-expendable property
account upon purchase and shall be recognized as an expense upon issuance to
the end-user.
6.3 Further, Section 3.5 thereof states that the setting of a capitalization threshold of
₱50,000.00 shall be considered as a change in accounting policy and shall be
applied retrospectively. It shall be applied for all tangible items acquired in CY
2024 onwards, as well as to items acquired in prior years.
6.4 The Audit Team reviewed the subsidiary ledger of PPE account as of December
31, 2024, and discovered that tangible items below ₱50,000.00, with a total cost
of ₱45,600,127.26 (Appendix 6), which should have already been classified as
semi-expendable property, were still included in the PPE account.
6.5 An interview with the City Accountant revealed that they began recording items
procured using the new capitalization threshold only in the second semester of
CY 2023. However, no adjustments and/or reclassifications have yet been made
for items from prior years.
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