AUDIT OBSERVATIONS AND RECOMMENDATIONS
FINANCIAL AUDIT
Property, Plant, and Equipment (PPE)
1. The Local Government Unit (LGU) did not take advantage of the guidelines and
procedures of COA Circular No. 2020-006 dated January 31, 2020 on the one-time
cleansing of Property, Plant and Equipment (PPE), thus affecting the fairness of
presentation of the financial position in the financial statements and depriving the
government of reliable and useful information in decision-making and
accountability for these assets.
1.1 COA Circular No. 2020-006 dated January 31, 2020, was issued to prescribe the
guidelines and procedures for conducting inventory, recognizing items found at
stations and addressing the disposition of missing PPE items for the one-time
cleansing of PPE accounts of government agencies to establish PPE balances that
are verifiable as to existence, condition and accountability.
1.2 Our review of the LGU’s compliance with the said Circular revealed that they
have not taken advantage of the various guidelines and procedures to cleanse their
PPE accounts balances, as discussed below:
a. Non-conduct of a complete physical count of all its PPE
1.3 We interviewed the Municipal Treasurer and the Municipal Accountant to inquire
about compliance with the requirement to conduct a physical count of all its PPE,
whether acquired through purchase or donation, including those constructed by
the administration and found at the station. The Municipal Treasurer and
Municipal Accountant explained that the activity was not carried out because they
have not yet reorganized the Inventory Committee. Furthermore, the Municipal
Treasurer mentioned that she had already received a draft order. However, she
initiated revisions to clarify the responsibilities of the committee members.
b. Non-adoption of unique property number for each PPE and absence of property
stickers placed on each PPE.
1.4 Section 5.6 of the Circular provides that each government agency shall adopt a
uniform property identification system for PPE wherein a unique Property
Number shall be assigned for each PPE item, using the following numbering
system:
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