7.16 In view of the foregoing, the Buildings, Hospitals and Health Centers, and Motor
Vehicles accounts, as well as the Government Equity were overstated by
₱4,655,979.35 and ₱2,883,444.71 (net book value), respectively. This
overstatement pertains to the cost of properties, including buildings situated on
land owned by the barangays and motor vehicles that were either donated to or
registered in the name of the barangay. As a result, this affects the fair
presentation of these accounts in the financial statements.
7.17 We recommended and Management agreed to:
a. Require the City Accountant, in coordination with the Barangay Office
Affairs (BAO) and the Liga ng mga Barangay, to obtain documents of
ownership of properties and conduct a thorough examination of the
ownership status of the land on which the subject infrastructure assets
are situated, particularly those identified in Appendix 8;
b. Upon verification of ownership, consider facilitating the necessary steps
to transfer the identified assets directly utilized by the respective
barangays through donation, in accordance with Section 381 of RA No.
7160 and other relevant provisions, to ensure that the individual in actual
physical possession thereof is held responsible for their proper use,
maintenance, and accountability;
c. Require the City Accountant to prepare the necessary adjusting entries
to reclassify items, totaling ₱4,655,979.35, that do not meet the asset
recognition for PPE, pursuant to IPSAS 17 and Section 4.2 of COA
Circular No. 2020-006 dated January 31, 2020, to present fairly the
affected accounts in the financial statements; and
d. Require the City Accountant, through BAO, to ensure that the necessary
adjustments are also reflected in the barangay’s books of accounts.
Biological assets totaling ₱1,123,860.00 could not be fully ascertained
8. The reported balance of the Biological Assets account, totaling P1,123,860.00, is
uncertain due to: (a) incomplete and unreconciled inventory count; (b) dormant
accounts exceeding ten years; (c) non-maintenance of required ledger and
property cards; and (d) the lack of recognition and measurement of stocks in
accordance with IPSAS 27, thus affecting the accurate presentation of the
accounts in the financial statements.
8.1 Paragraph 13 of the IPSAS 27 states that an entity shall recognize a biological
asset or agricultural produce only when it controls the asset as a result of a past
event, it is probable that future economic benefits or service potential associated
with the asset will flow to the entity, and when the fair value or cost of the asset
can be measured reliably.
8.2 Further, Paragraphs 16 of the IPSAS 27 provide that a biological asset is measured
on initial recognition and at each reporting date at its fair value less costs to sell,
except where the fair value cannot be measured reliably. As such, paragraph 34 of
the same standard states that the presumption that fair value can be measured
reliably for a biological asset can only be rebutted on initial recognition for a
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