AUDIT OBSERVATIONS AND RECOMMENDATIONS
A. FINANCIAL AND COMPLIANCE AUDIT
One-Time Cleansing of Property, Plant, and Equipment
1. The Inventory Committee was not able to conduct a complete physical inventory
count for the one-time cleansing of the Property, Plant, and Equipment (PPE)
accounts mandated under COA Circular No. 2020-006 thereby raising concerns
about the existence and fairness of the presentation of the PPE balances of
₱452,816,644.68.0 in the financial statements, including movable properties totaling
₱68,683,853.89, as of December 31, 2024.
1.1. COA Circular No. 2020-006, dated January 31, 2020, was issued to prescribe
guidelines and procedures for inventory-taking, recognizing items found at the
station, and disposing of nonexistent or missing PPE items. This aims to facilitate a
one-time cleansing of PPE accounts of government agencies to establish verifiable
balances regarding existence, condition, and accountability.
1.2. Section 5.1 of the circular states that “Each government agency shall conduct a
physical count of all its PPE, whether acquired through purchase or donation,
including those constructed by administration and found at station.”
1.3. Our verification of the Municipality’s year-end financial statements showed that, as
of December 31, 2024, PPE had a total balance of ₱452,816,644.68, which
represents 51% of its total assets amounting to ₱895,731,959.02, detailed as follows
(see Appendix 1 for details):
Account Net Book Value
Immovable Properties
Land ₱ 2,548,566.95
Land Improvements 5,170,824.09
Infrastructure Projects 145,673,919.61
Buildings and Other Structures 35,097,412.46
Construction in Progress 195,642,167.68
Sub-total – Immovable Properties ₱ 384,132,890.79
Movable Properties
Machinery and Equipment ₱ 28,384,929.56
Transportation Equipment 29,561,578.82
Furniture, Fixtures, and Books 1,758,614.34
Other Property, Plant, and Equipment 8,978,631.17
Sub-total – Movable Properties ₱ 68,683,853.89
Total PPE ₱ 452,816,644.68
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