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Findings No.3 COA Annual Audit Report 2004

July 26, 2008

The Inventory Committee failed to conduct physical count of the Property, Plant and Equipment valued at P 690,603,763.18 in violation of the provisions of Section 124 of the New Government Accounting System Manual, thus rendered the accuracy of the account balance doubtful. Further, no reconciliation was made of the property ledger cards of the GSO with the ledger cards of the Accounting Department, as mandated of Section 114 of the NGAS.

Section 124 of the NGAS Manual states that “The Local Chief Executive shall require periodic physical inventory of supplies or property . . . Physical count of property, plant and equipment shall be made annually and reported on the Report of Physical Count of Property, Plant, and Equipment (RPCPPE). This shall be submitted to the Auditor concerned not later than January 31 of each year.”

Section 114 of the same manual provides that “The Chief Accountant shall maintain the perpetual inventory records comprising of Property, Plant and Equipment Ledger Card (PPELC) for each type of livestock. Such ledger cards shall contain the details of the property, plant and equipment and livestock account in the inventory control account in the general ledger.

“The General Services Officer or the Municipal Treasurer, as the case may be, shall likewise maintain property cards for property, plant and equipment and work animals in their custody to account for the receipt and disposition of the same. The balance per property cards should always reconcile with the ledger of the accounting unit. They should also reconcile with other property records like Acknowledgement Receipt for Equipment (ARE).”

Verification revealed that due to the non-prioritization of the financial control on the safeguarding of assets, the Inventory Committee failed to conduct the inventory-taking of their property, plant and equipment costing P 690,603,763.18 as of December 31,2004. Below is the breakdown of the Property, Plant and Equipment:

Land and Land Improvements P 119,258,653.01

Buildings 128,127,694.99

Office Equipment, Furniture and Fixtures 38,716,236.93

Machineries and Equipment 117,491,380.46

Transportation Equipment 17,114,135.72

Other Property, Plant and Equipment 67,971,138.86

Reforestation Projects 29,490.50

Construction-in-Progress 201,895,032.71

P 690,603,763.18

In addition, it was further disclosed that the Accounting Division and General Services Office did not maintain appropriate ledger cards and property cards, respectively. Further, the recorded accountability for assets cannot be compared with the existing assets and any difference could not be acted upon/rectified.

The inadequacy of the accounting records did not permit the Auditor to apply alternative audit procedures.

Such conditions were not in conformity with the provisions of Section 124 and 114 of the NGAS Manual.

In effect, the accuracy and the correctness of the account balance of P690,603,763.18 is rendered doubtful.

The Management commented that the Accounting division are in the process of updating of the ledger cards for reconciliation of the differences, if any. Further, the recommendation will soon be acted upon considering that it will be the first time for the city government to conduct the physical count.

RECOMMENDATION:

Comply with and implement the provisions of Section 114 and 124 of NGAS Manual to establish the accuracy and correctness of the Property, Plant and Equipment account.

Written by admin · Filed Under Commission on Audit, Malaybalay 

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