Non-derecognition of Disposed Assets Due to Incomplete Records
7. Unserviceable properties with an acquisition cost of ₱2,872,383.09, whose net book
value could not be determined due to incomplete subsidiary records, were not
derecognized from the PPE account upon disposal, contrary to paragraph 82 of
the IPSAS 17. Additionally, certain other items could not be traced to the ledger
card maintained by the Provincial Accountant due to limited data and record
deficiencies, potentially resulting in the overstatement of the PPE accounts by an
undetermined amount.
7.1 Paragraph 82 of IPSAS 17 states that the carrying amount of an item of property,
plant, and equipment shall be derecognized upon disposal or when no future
economic benefits or service potential are expected from its use or disposal.
7.2 On January 17, 2024 and April 17, 2024, the Appraisal and Disposal Committee
conducted public auctions to dispose of various unserviceable properties of the
Provincial Government, generating total sale proceeds of ₱2,080,073.96.
7.3 A review of the subsidiary ledger revealed that PPE with a total cost of
₱6,046,153.95 and a carrying value of ₱679,322.71 was derecognized. On
December 12, 2024, the Audit Team requested details of the derecognized
properties in the books and reconciled them with the reports submitted by the
Provincial General Services Officer for items disposed of during the year.
During this process, we observed the following deficiencies:
Disposed unserviceable properties not derecognized from the PPE
7.4 As previously reported in the prior year’s Annual Audit Report, the Provincial
Accounting Office (PAccO) did not maintain Property, Plant, and Equipment
Ledger Cards. While subsidiary ledgers were maintained under the FMIS for
each account, these did not provide a comprehensive report containing the
essential information for each class of PPE, such as acquisition details,
description, custody, estimated useful life, and disposal records.
7.5 Additionally, another database within the FMIS, referred to as the ledger card,
was maintained to capture information such as properties purchased, unit price,
their corresponding serial numbers, property numbers, and persons accountable.
However, this data appears to be incomplete.
7.6 Nevertheless, the Audit Team utilized the available ledger card to reconcile the
items disposed of by the Disposal and Appraisal Committee. During this
process, it was observed that items recorded as PPE under the old chart of
accounts, with a total acquisition cost of ₱2,872,383.09, were not included in
the schedule of PPE derecognized during the year.
7.7 To ascertain the carrying value of the identified properties, we requested a copy
of the schedule of PPEs from PAccO. However, difficulties were encountered
in matching the items, as the provided schedule did not include property
numbers or descriptions to confirm that the listed assets corresponded to those
disposed of.
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