COA Finds P80-Million Irregularities in LGU Kawit’s PPE Account

The Commission on Audit (COA) has found irregularities in the Property, Plant and Equipment (PPE) account of the Local Government Unit (LGU) of Kawit, Cavite, amounting to more than P80 million.

According to the latest COA’s Annual Audit Report, released to the public in 2023, the reliability and accuracy of the PPE account with a net book value of P529,013,315.61 as of December 31, 2022 could not be ascertained due to the presence of lump sum amounts totaling P78,397,105.23 both in the Report on the Physical Count of Property, Plant and Equipment (RPCPPE) and the accounting records.

The COA said that these lump sum amounts were inconsistent with Section 111 of Presidential Decree (PD) No. 1445, which requires the accounts of the agency to be kept in such detail as is necessary to meet the needs of the agency and to furnish the information needed by fiscal or control agencies of the government.

COA also found that the LGU Kawit failed to derecognize disposed properties amounting to P2,502,362.39 from the books of account, contrary to paragraph 82 of International Public Sector Accounting Standards (IPSAS 17), which states that the carrying amount of an item of property, plant, and equipment shall be derecognized on disposal or when no future economic benefits or service potential is expected from its use or disposal.

COA said that these deficiencies resulted in the overstatement of the PPE account balance at year-end, which comprised 62.10 percent of the LGU Kawit’s total assets.

The COA’s 2022 Audit Report recommended that Kawit Municipal Mayor Angelo Emilio G. Aguinaldo direct the following:

a. the Municipal Accountant and the General Services Officer to specifically identify and provide details of the property totaling P78,397,105.23 in the RPCPPE taken from damaged old municipality records and adjust the accounting records and the RPCPPE accordingly, if necessary. Otherwise, start necessary procedures for the one-time cleansing of PPE account, as provided under COA Circular 2020-006, to eliminate the aforementioned deficiencies and to establish reliable PPE balances that are verifiable as to existence, condition and accountability.

b. the Municipal Accountant to derecognize the disposed property amounting to P2,502,362.39 in the books of the Municipality.

Meanwhile, LGU Kawit, in its rebuttal to the COA Report, explained that there was a delay in the implementation and completion of the Municipality’s application of COA Circular No. 2020-006 due to the death of the head of the Inventory Committee who was responsible for overseeing the committee’s conduct of the physical inventory. Nonetheless, the Management committed to continue and complete the application of said circular in CY 2023.

The LGU Kawit has not yet issued a statement regarding the COA finding as of press time.