Findings No.1 COA Annual Audit Report 2006

July 25, 2008

1. Ownership and existence of Land in the total amount of P13,088,235.98 cannot be ascertained due to the absence of supporting documents to prove that such land were really existing and were owned by the City Government.

Section 58 of Presidential Decree No. 1445, Audit of assets provides that the examination and audit of assets shall be performed with a view to ascertaining their existence, ownership, valuation and encumbrances as well as the propriety, of items composing the respective asset accounts; determining their agreement with records; providing the accuracy of such records; ascertaining if such assets were utilized economically, efficiently and effectively; and evaluating the adequacy of controls over the accounts.

Land (201) is the account used to record the cost or appraised value or other appropriate value of land acquired by the government including property rights and interest.

Evaluation and review of the Trial Balance of the City as of November 30, 2006, revealed that two items in the schedule of Fixed Assets supporting the Land Account showed the following:

Date of Acquisition

Particular

Code

AmountDec. 31, 1996Land Various Sites201P 10,220,071.54Dec. 27, 2002Land Various Sites2012,868,164.44TOTALP 13,088,235.98

However, subsidiary ledgers of this account showed no complete description of each land account and no itemized listing as to its location, area, kind, cadastral lot number and/or Torrens Title, making it difficult to ascertain whether the mentioned properties are indeed existing and are owned by the City government.

Alternative auditing procedures were made, such as checking the physical inventory submitted by the General Services Office against the general ledgers and subsidiary ledgers maintained by the Accounting Division and conducting inspection on selective basis to determine their existence. The following observations were noted under the General Fund account:

1. The report on the Physical Count of Property, Plant and Equipment – Land prepared by General Services Office with a total of P40,553,931.81 did not reconcile with the general ledgers/subsidiary ledgers of Land account of P47,401,746.07 maintained by the City Accountant’s Office.

2. The General Services Office cannot present Torrens Title or proof of ownership of land as stated in the subsidiary ledger, land various site, totaling P13,088,235.98.

Interviews conducted on concerned employees assigned in maintaining the said account in the Office of the City Accountant revealed that the balances as of the end of each year were just brought forward to the new ledgers at the beginning of each succeeding year without listing the actual composition of the various sites indicated therein. They further justified that the retrieval of documents supporting the composition of the acquired lands were not available in their office files. Further, they said that some of the figures shown in the subsidiary ledger were just reconciling items when they setup the Electronic New Government Accounting System.

As a result, the validity, existence and correctness of the Land Account totaling P13,088,235.98 could not be ascertained.

During the exit conference, the City Accountant and the representative of the General Services Officer were amenable to organize a composite team composed by the Accounting, General Services and Assessor’s Offices to ascertain the existence, ownership and valuation of all the lands acquired by the City Government. At present, the Accounting Division is securing a list from the Assessor’s Office of all registered lands of the City Government as declared under the tax declaration.

Recommendations:

Require the GSO to exhaust all means to retrieve the documents pertaining to the “Land-Various Sites Account” totaling P13,088,235.98.

Instruct the City Accountant to include in the subsidiary ledgers of fixed assets–land account, the complete description and all the necessary information on each item of the acquired land.

Reconcile the report on the Physical Count on Property, Plant and Equipment – Land submitted by the General Services Offices with the records of the Accounting Division on land account under the general fund account.

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Written by admin · Filed Under Commission on Audit, Gingoog City