1.7 Based on the foregoing, Management did not follow the general and procedural
guidelines of COA Circular No. 2020-006 dated January 31, 2020, which aim to
assist Management in implementing the one-time cleansing of PPE.
1.8 Discrepancies in the PPE account balances between the Statement of Financial
Position and RPCPPE due to non-reconciliation rendered the balance of the PPE
unreliable and inaccurate.
1.9 This observation was communicated to Management through Audit Observation
Memorandum No. 2024-01(23) dated April 15, 2024.
1.10 We recommended and Management agreed to direct the Inventory
Committee to:
a) Prepare and submit the PIP to the COA Audit Team at least ten (10)
calendar days before the start of the inventory activities;
b) Use the ICF prescribed in Annex A of COA Circular No. 2020-006 dated
January 31, 2020; and
c) Reconcile the difference of ₱72,894,810.00 between the accounting and
property records, and the result of the actual physical count pursuant to
COA Circular No. 2020-006 dated January 31, 2020.
RPT and SET Receivables not established at the beginning of the year - ₱21,686,500.81
2. The Real Property Tax (RPT) and Special Education Tax (SET) Receivables were
not established at the beginning of the year, contrary to Sections 19(b) and 20 of the
New Government Accounting System (NGAS) Manual for Local Government Units
(LGUs), Volume I, thus, understating the RPT and SET Receivables by
₱21,686,500.81.
2.1 Section 19 of the NGAS Manual for LGUSs, Volume I, requires the Modified
accrual method of accounting to be used for real property taxes. At the beginning
of the year, Real Property Tax Receivable and Special Education Tax Receivable
must be established. This approach acknowledges the need to record in the books
not just income estimates from real property taxes but also actual receivables from
those taxes. However, to avoid appropriating uncollected revenues, which could
lead to a significant cash overdraft, these amounts shall be credited to Deferred
Real Property Taxes Income/Deferred Special Education Tax Income. Real
Property Tax Income/Special Education Tax Income will be recognized upon
receipt of collection.
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