• Mon. Apr 22nd, 2024

    Cavite News

    Upholding Truth

    COA Uncovers P52-Million Accounting Errors in Kawit LGU’s Land Improvements

    The Commission on Audit (COA) has flagged the Municipality of Kawit, Cavite for reporting its land improvements without any accumulated depreciation in its financial statements for the year 2022, contrary to the accounting standards and policies.

    According to the COA Audit Report, the Land Improvements, Aquaculture Structures account of the Municipality had a gross value of P52,057,914.62 as of December 31, 2022, but it was not reduced by any accumulated depreciation, resulting in the overstatement of the asset and the understatement of the other affected accounts.

    The COA said that the Municipality should have followed the International Public Sector Accounting Standards (IPSAS 17) and the Manual on New Government Accounting System (MNGAS), which require that an item of property, plant and equipment (PPE) be carried at its cost, less any accumulated depreciation and any accumulated impairment losses.

    The COA also said that the Municipality should have used the straight-line method of depreciation, with a residual value equivalent to 10 percent of the cost, and that the depreciation should have started on the second month after purchase or completion of the PPE.

    In a reply, the Municipal Accountant of Kawit admitted that the depreciation expense for the Land Improvements, Aquaculture Structures account was actually recorded, but due to an alleged system error, it was posted under different PPE accounts. 

    The same error also caused the total accumulated depreciation to be reported under those different accounts and not under the Land Improvements, Aquaculture Structures account, the accountant alleged.

    COA recommended that Kawit Mayor Angelo Emilio Aguinaldo direct the Municipal Accountant to identify the total amount of accumulated depreciation that should have been posted under the Land Improvements, Aquaculture Structures account and adjust both the accounts accordingly. 

    COA also recommended that the Municipal Accountant coordinate with the accounting system provider to review the system and fix the issue in the posting of depreciation of PPE accounts.

    The Municipal Accountant said that the Management has already communicated with the system provider to address the posting issue.