AUDIT OBSERVATIONS AND RECOMMENDATIONS
FINANCIAL AUDIT
Property, Plant, and Equipment (PPE)
1. The Local Government Unit 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 on inventory taking, recognition of those found at
station and disposition for 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 Review of the compliance of the Agency 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 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
administration and found at the station. The Municipal Treasurer and Municipal
Accountant explained that the activity was not carried out because the Inventory
Committee was unable to mobilize due to a shortage of manpower and insufficient
time to fulfill its responsibilities.
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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