AUDIT OBSERVATIONS AND RECOMMENDATIONS
A) FINANCIAL AND COMPLIANCE AUDIT
Unreconciled PPE balance - ₱9,530,828.25
1. The validity, existence, and accuracy of the PPE accounts totaling ₱753,170,785.01
could not be ascertained due to the unreconciled difference of ₱9,530,828.25 between
the PPE balances in the RPCPPE and the books of accounts, thus affecting the fair
presentation thereof in the Financial Statements. These unreconciled differences
could have been properly and adequately addressed had Management implemented
the one-time cleansing of PPE as prescribed in COA Circular No. 2020-006.
1.1. The persistent discrepancies in the PPE accounts of government agencies have
become a long-standing issue, preventing the accurate determination of PPE balances
reflected in the financial statements. If not addressed effectively, this condition will
continue to undermine the fair presentation of the financial position of government
agencies, depriving the government of reliable and essential information for decision-
making and accountability regarding these assets.
1.2. To address this, COA Circular No. 2020-006, dated January 31, 2020, was issued to
provide guidelines and procedures for inventory taking, the recognition of PPE items
found at stations, and the disposition of non-existing or missing PPE items. The
Circular aims to ensure a one-time cleansing of PPE accounts within government
agencies, establishing verifiable PPE balances concerning their existence, condition,
and accountability. Section 5 of the Circular outlines the following key guidelines:
a. Each agency must conduct a physical count of all PPE, including
purchased, donated, and constructed items.
b. The Head of the Agency must form an Inventory Committee, with
members from the Accounting and Property Divisions, to complete the
inventory in three months or less.
c. Committee members must be temporarily relieved of their regular duties
to focus on the inventory.
d. The entire inventory must be witnessed by a COA Auditor or designated
audit team members.
e. The Head of the Agency may also require an Internal Audit Service/Unit
representative to observe.
f. The Inventory Committee is responsible for confirming the existence,
completeness, and condition of all PPE.
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