Biological Assets
4. Biological Assets valued at ₱457,500.00 that have been in the books for more than five
years, were not stated at fair value as of the reporting date due to the non-submission
of the Inventory Report of Breeding Stocks and the prevailing market price for each
item by the Municipal Agriculturist to the Municipal Accountant, contrary to Section
4.5.1 of COA Circular 2016-004 dated September 30, 2016, and the pertinent
provisions of the IPSAS 27, thus, rendering the existence and valuation of the account
presented in the financial statements doubtful and unreliable.
4.1. Paragraphs 16 and 19 of International Public Sector Accounting Standards (IPSAS)
27 provide the recognition and measurement of biological assets, to quote:
“ 16. A biological asset shall be measured on initial recognition and at each
reporting date at its fair value less cost to sell, xxx.
19. The determination of fair value for a biological asset or agricultural
produce may be facilitated by grouping biological assets or
agricultural produce according to significant attributes; for example,
by age or quality. An entity selects the attributes corresponding to the
attributes used in the markets as a basis for pricing.”
4.2. Further, paragraph 34 of the same Standard states that, “There is a presumption that
fair value can be measured reliably for a biological asset. However, that presumption
can be rebutted only on initial recognition for a biological asset for which market-
determined prices or values are not available, and for which alternative estimates of
fair value are determined to be clearly unreliable. In such a case, that biological asset
shall be measured at its cost less any accumulated depreciation and any accumulated
impairment losses. Once the fair value of such a biological asset becomes reliably
measurable, an entity shall measure it at its fair value less costs to sell. xxx”
4.3. Anent thereto, COA Circular No. 2016-004 dated September 30, 2016, provides
guidelines for the preparation of financial statements, consistent with the adoption of
IPSAS in LGUs.
4.4. Section 4.5 thereof states that the Local Agriculturist shall provide the Local
Accountant with the following reports so that the biological asset accounts in the
financial statements are fairly presented in accordance with the IPSAS:
“4.5.1 Provide the inventory of breeding stocks and other biological assets,
and the prevailing market price for each item as of reporting date;
and
4.5.2 Provide information on the prevailing cost to sell of the biological
assets.”
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