COA Reveals Mismanagement of Unserviceable Properties in LGU Kawit, Cavite

In a recent audit conducted by the Commission on Audit (COA), the Local Government Unit (LGU) of Kawit, Cavite under Mayor Angelo Aguinaldo has come under scrutiny for its handling of unserviceable properties. The findings highlight discrepancies in property disposal and accounting practices, potentially impacting the municipality’s financial standing.

Here are the key points from the COA report:

1. Unserviceable Properties Not Disposed:

• The LGU failed to dispose of unserviceable properties amounting to P3,352,280.71. These properties were no longer in use and had no resale value.
• This non-disposal contravened Section 79 of Presidential Decree (PD) No. 1445, which mandates that unserviceable properties be sold at public auction.

1. Overstated Property, Plant, and Equipment (PPE) Accounts:

• Disposed Property, Plant, and Equipment (PPE) worth P3,331,362.39 were not derecognized from the books of account as of December 31, 2021.
• This oversight violated paragraph 82 of IPSAS 17, which requires derecognition of PPE upon disposal when no future economic benefits or service potential are expected.

1. Impact on Financial Reporting:

• The failure to recognize disposed properties overstated the PPE and Government Equity accounts by the carrying amount of the property disposed.
• Additionally, the non-disposal of unserviceable properties exposed these assets to further deterioration and reduced their salvage value.

• COA recommends that the Municipal Mayor take the following actions:
  • Direct the General Services Officer (GSO) to expedite the disposal process by submitting a request for disposal, along with the Inventory, Inspection, and Appraisal Report (IIRUP) and other supporting documents.
  • Upon disposal, instruct the Municipal Accountant to draw a Journal Entry Voucher to derecognize the carrying value of the disposed properties.

COA said LGU Kawit, Cavite, must take corrective measures to rectify these deficiencies and ensure transparent and responsible handling of public assets. Failure to do so may have long-term implications for the municipality’s financial stability and public trust.