7.2 As such, IPSAS 17, which sets the accounting standards for PPE, states that an
item should be recognized as an asset if, and only if:
a. It is probable that future economic benefits or service potential associated with
the item will flow to the entity; and
b. The cost or fair value of the item can be measured reliably.
7.3 Moreover, Section 4.2 of COA Circular No. 2020-006 dated January 31, 2020,
supplements the recognition criteria stated in IPSAS 17, to wit:
a. Beneficial ownership and control clearly rest with the government;
b. The asset is used to achieve government objectives; and
c. It meets the capitalization threshold of ₱50,000.00.9
7.4 Additionally, paragraph 29 of IPSAS 1 requires an entity to present information
that is relevant, reliable, comparable, and understandable. Understandability, as
discussed in the same standard, is the quality of information that enables users
to comprehend its meaning. It is enhanced when information is classified,
characterized, and presented clearly and concisely.
7.5 Our examination of the PPE accounts in the City's books of accounts as of
December 31, 2024, revealed that these accounts included properties with an
acquisition cost of ₱15,075,146.75 and a net book value of ₱10,162,778.22, which
were implemented by the City with funding sourced from the City government,
barangays, and other external sources. However, these properties were directly
utilized and managed by various barangays, as summarized in the table below
(Appendix 7 for details):
Account Accumulated Net Book
Account Title Cost
Code Depreciation Value
Buildings 1-07-04-010 ₱ 8,454,069.30 ₱2,460,445.71 ₱5,993,623.59
Hospitals and
Health Centers 1-07-04-030 981,077.45 175,403.15 805,674.30
Motor Vehicles 1-07-06-010 5,640,000.00 2,276,519.67 3,363,480.33
Total ₱15,075,146.75 ₱4,912,368.53 ₱10,162,778.22
7.6 The Audit Team issued audit queries to the respective barangays, and as of this
date, five (5) barangays have responded. The following barangays have confirmed
that the motor vehicles and the land on which the infrastructure are situated, are
owned by the respective barangays, totaling ₱2,620,000.00 and ₱2,035,979.35,
respectively (Appendix 8):
Name of
Motor Vehicles Infrastructure Assets Total
Barangay
Bagacay ₱ 0.00 ₱ 1,138,131.27 ₱ 1,138,131.27
Banilad 950,000.00 0.00 950,000.00
9 Semi-expendable Property. Tangible items below Fifty Thousand Pesos (₱50,000.00) shall be accounted as semi-
expendable property. (CONDITIONAL IMPLEMENTATION – President’s Veto Message, December 30, 2021,
Volume I-B, page 819, Republic Act (RA) No. 11639)
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