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Findings No.3 COA Annual Audit Report 2004

July 28, 2008

3. Unserviceable properties, plant and equipment in the total amount of P1,057,407.64 were not transferred to Other Assets account as required in COA Circular No. 2002-03.

Section 140 of COA Circular No. 2002-003 dated June 20, 2002 described Other Assets as an account used to record the value of obsolete and unserviceable assets as well as other assets still serviceable but no longer used. These items are not subject to depreciation.

In the course of our verification, it was noted that several properties totaling P 1,057,407.46 were included in the inventory and inspection report of unserviceable property prepared and submitted by the General Services Officer. (HYPERLINK “OroquietaCity04_Annexes.xls” \o “Annexes 1 – 4″Annex 3) These properties consisted of office equipment, furniture and fixtures, IT equipment and software, communication equipment, hospital equipment, other machinery and equipment and motor vehicles. These properties, which were acquired some years ago were already unserviceable and were waiting for proper disposition. These assets are supposed to be transferred already to Other Assets but they are still carried in the books as Other Property, Plant and Equipment.

The inclusion of these unserviceable properties in the Other Property, Plant and Equipment account resulted in the overstatement of the account and understatement of Other Assets account.

When this deficiency was presented to management, the officials and employees involved readily agreed to improve its existing system.

Recommendation

Require the City Accountant to prepare the necessary adjusting entry in order to reflect the correct presentation of these accounts in the financial statements.

Written by admin · Filed Under Commission on Audit, Oroquieta 

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