Updates on Property Management.ppt

Relevant Laws, Rules and Regulations
1. Presidential Decree No. 1445-Government Auditing
Code of the Philippines
2. Government Accounting Manual (GAM)
3. Republic Act 9184- Government Procurement
Reform Act (GPRA) and its CY 2016 Revised
Implementing Rules and Regulations.
4. COA Circular No. 92-386 Except portions on
Procurement- repealed/amended by R.A. 9184
1

Section 105 (PD 1445). Measure of
liability of accountable officers.
1.Every officer accountable for government property
shall be liable for its money value in case of
improper or unauthorized used or misapplication
thereof, by himself or any person for whose acts he
may be responsible. He shall likewise be liable for all
losses, damages, or deterioration occasioned by
negligence in the keeping or use of the property
whether or not it be at the time in his actual custody.
2

Section 105 (PD 1445). Measure of liability of
accountable officers.
2. Every officer accountable for government funds
shall be liable for all losses resulting from the
unlawful deposit, use, or application thereof and for
all losses attributable to negligence in the keeping of
the funds.
3

Changes Adopted in the GAM
Particulars NGAS GAM
1. FS Title 1. Balance Sheet
2.Statement of Income
and Expenses
3.Statement of
Government Equity
4.Cash Flow Statement
1. Statement of Financial
Position
2.Statement of Financial
Performance
3.Statement of Changes in
Net Assets/Equity
4.Statement of Cash Flow
2. Components of FS Four Six
In addition to the above:
5. Statement of
Comparison of Budget
and Actual Amounts
6.Notes to Financial
Statements
4

3. Chart of Accounts COA Circular 2004-008 COA Circular 2013-002,
January 30, 2013
COA Circular 2014-003,
April 15, 2014
4.Unified Accounts Code
Structure (UACS)
NONE Compliant
5. Books Maintained Regular Agency Book and
National Government
Book
Fund Cluster
6.Estimated Useful Life Prescribed by COA Management prerogative
5

7. PPE Threshold None P15,000 and above
8. Inventory Costing Moving Weighted Average Moving Weighted
Average
Specific Identification
9. Fund Maintenance One Fund Concept Fund Clustering
10.Cash Flow DirectMethod DirectMethod
11.Completed Public
Infrastructure
Derecognized Recognized
6

12. Statement of
Financial Position
Assets
Liabilities
Without distinction
Without distinction
With Distinction
Current and Non-current
With Distinction
Current and Non-current
13. Statement of Financial
Performance
Subsidies, Transfers
Form part of Income Not part of Revenue from
Current Operation
14. Impairment loss None Recognized
15. Adjustment affecting
Government Equity
Uses Prior Year’s
Adjustment account
Direct adjustment to
Equity
7

16. Income Collection Without authority to use-
BTr
With authority to use-
NGAs
Recorded by NGAs
17. Accounting for
Donation
• with conditionality
• without conditionality
• with restriction
Income
Income
-
Liability
Revenue
Revenue
18. Monitoring of
Obligation/Payment
None Section C of ORS
19.Residual value 10% At least 5%
8

9
Applying Accounting
Procedures for Inventories
Semi-expendable property
–tangible items with
estimated service life of more
than one year not within the
capitalization threshold of
P15,000.00
Key Terms
Inventories-assets in the
form of materials or
supplies for sale, for
distribution, for
manufacturing and for
consumption

10
Classifications of Inventories
For
Manufacturing
For
Sale
For
Distribution
For
Consumption

11
METHODS OF ACCOUNTING FOR
INVENTORIES
Perpetual Inventory
Periodic inventory
•Continually records all the changes in inventory
•All acquisition are recorded by debits to purchases

Records, Forms and Reports
• Stock Card
• Supplies Ledger Card
• Requisition and Issue Slip
• Purchase Request
• Purchase Order
• Report of Supplies and Materials Issued
• Waste Material Report
12

Records, Forms and Reports
 Inventory Custodian Slip
 Report on the Physical Count of Inventories
 Inspection and Acceptance Report
 Report of Accountability for Accountable Forms
13

14
PROCEDURES IN THE RECEIPT, INSPECTION,
ACCEPTANCE AND RECORDING DELIVERIES
OF INVENTORY ITEMS
Supply Officer
signs “Received”
portion of the DR
and prepares IAR
Accounting
Div/unit prepares
JEV
Property
inspector inspects
and verifies
Supply Officer
prepares DV
Supply Officer
acknowledge
receipt
SLC Keeper
posts necessary
information to
the SLC

Criteria for Recognizing PPE
 future economic benefits will flow to the
entity
 cost or fair value can be measured reliably
 beneficial ownership and control rest with
the entity
 meets the capitalization threshold of
P15,000.00GAM
15

Policies on the Application of the
P15,000.00 Threshold
 minimum cost of the individual asset
 individual items below the threshold but
work together as one network of asset, the
amount exceeds the threshold
 the P15,000 shall not be applied to the
aggregate value of PPE acquired in bulk
16

Policies Applicable to Depreciation
of PPE
 All PPE shall be depreciated except land and not
recognized heritage assets
 Depreciation begins when the asset is available for use,
if availability is on or before the 15th of the month,
record depreciation during the month, if after the 15th
of the month, depreciation shall be for the succeeding
month
 Adopt straight line method of depreciation
 Estimation of the useful life of the asset is a matter of
judgment based on the experience of the entity
17

Policies Applicable to Depreciation
of PPE
 Residual value is at least 5% of the cost
 Estimated useful life and residual value shall be
reviewed on a regular basis and revised if a change is
clearly demonstrated
 Depreciation is recorded as a debit to Depreciation
Expense and a credit to Accumulated Depreciation
 Each part of a PPE with a cost that is significant to the
total cost shall be recorded and depreciated separately
 Computation of depreciation shall be cost less residual
value over the estimated useful life
18

Accounting Policies on Loss
of Property
 Accountable officer shall immediately notify the Auditor concerned
within 30 days of the lost property and submit his/her application
for relief together with supporting evidences.
 Lost property and the related accounts shall be derecognized in
the books upon receipt of the Report of Lost, Stolen, Damaged,
Destroyed Property submitted by the Property Officer supported
by a Notice of Loss prepared by the Accountable Officer.
 Loss shall be charged to account “Loss of Assets” at an amount
equal to its carrying amount.
 Accountability of the accountable officer over the loss shall be
based on depreciated replacement cost.
20

Accounting Policies on Loss
of Property
 A receivable account shall be set up to record the
accountability of the accountable officer simultaneous
with derecognition of the lost PPE.
 Compensation from third parties of PPE that were
impaired, lost or given up shall be recorded as income.
 In case of partial destruction/loss of PPE the amount to
be derecognized shall be its carrying amount less the fair
value of the remaining serviceable portion.
21

Common Problems in Procurement
1. No APP
2. Piecemeal procurement
3. PPMPs not consolidated
4. PBDs not posted in the PhilGEPS
5. Splitting of requisitions, contracts,
payments
6. Non conduct of public bidding

7. Alternative modes of procurement
being the preferred methods
8. Non invitation of observers
9. Delayed procurement resulting to
delayed implementation of
projects
10. Ordinary/regular office supplies
not purchased from the
Procurement Service (PS)

 11. Erroneous bidding procedures
 12. Non requirement of performance and
warranty security
 13. lapses in procedures
 14. non observance of the no brand name rule
 15. collusion among bidders/bidders & BAC
 16. overstocking of supplies and property

Other Modes of Acquisition:
 1. Transfers of property not properly documented
and accounted for
 2. Donations are not properly documented
 3. Donated property are not taken up in the
books.
 4. Seized properties are not accounted for.

Common Problems in Delivery,
Acceptance & Payment
1. Ghost/short deliveries deliveries
2. Deliveries are not in accordance with the
contract
3. Non imposition of the liquidated damages in
case of delay/non performance
4. Inspection of deliveries are not conducted
rigidly
5. Acceptance of goods which are not in
accordance with the contract
6. Non imposition of retention
7. Delayed payment of perfected contracts
8. Inadequate documents supporting payments

Common Problems in Utilization,
Custodianship and Disposal
1. Excessive consumption of supplies/materials.
2. Non preparation of the Monthly Report of Supplies
and Materials Issued
3. Non conduct of physical count of government
property
4. Unreconciled accounting and property records
5. Overstated balances of inventories and PPE in the
books

Common Problems in Utilization,
Custodianship and Disposal
 6. Inadequate property and accounting
 records
 7. Unserviceable properties not disposed
 8. Disposed properties are not dropped in the
 agency’s books
9. Inadequate safeguards on government
property
10. Loss of property not reported to COA
11. Non renewal of AREs
12. Costly repairs of property

Transfer of Property
Sec. 76 P.D. 1445
Any government property that is no
longer needed by an agency or
unserviceable maybe transferred
without cost or at an appraised
valuation to other government agencies
upon authority of the respective heads
of agencies.
32

1. Property officer shall conduct an inventory of the
property no longer needed
2. Prepare a transfer and invoice receipt with the details of
property description, cost, etc.
3. Agency Heads ( transferor and recipient agency)
approves the transfer docs
4. Require appropriate receipt of items
5. Furnish the Accountants with original copy of transfer
docs for recording in the books
33

Donation
 Donations/contributions from
private sector, other govt. agencies
both local and foreign, and non
governmental organizations
Require a “Deed of Donation” &
“Acceptance of Donation”
34

Confiscation, Attachment, Seizure &
Foreclosure
Becomes government properties
by reason of violation of laws, rules
or regulations and the title to the
property has been acquired by
virtue of court decisions or by
competent authorities.
35

Confiscation, Attachment, Seizure &
Foreclosure
- Govt. agencies concerned shall submit to the COA a
monthly report of all goods and properties acquired by
them through confiscation, attachment, forfeiture or
donation within the first ten days of the following
month stating the description, quantity, estimated
value, date, place, mode of acquisition, location/where
stored, disposition for the month.
36

Requisitions
of supplies and materials
Except as provided in the GAA, the
stock on hand of supplies, materials
and equipment spare parts, acquired
through ordinary or emergency
purchase shall at no time exceed the
normal three (3) months requirements.
(1987 Adm. Code)
37

Deliveries
Deliveries of supplies, materials
and equipment being requisitioned
must be made by the
supplier/contractor in accordance
with the specifications, terms and
conditions as provided for in the
contract.
38

Deliveries
In case of failure to deliver within the
prescribed period, liquidated damages
of (1/10) of one percent (1%) shall be
imposed for every day of delay for the
undelivered/unperformed portion.
39

Inspection
-a means of verifying physical
evidence to establish existence
and condition of assets.
- the act of measuring, examining,
testing or gauging the
characteristics and features of a
product or service.
40

Inspection
Phil. Bidding Documents (May 2005): Procurement of
GOODS, Sec. IV – General Conditions of the Contract
Clause 14. Inspection and Tests
14.1 The Procuring Entity (PE) shall
have the right to inspect and/or test
the Goods
41

Acceptance and rejection of deliveries
- With a deficiency of less than 10% -
may be accepted, provided they
will serve the purpose for which
they were purchased (minor defect
and contract price reduced).
42

Custodianship
Guardianship of government
property by the person accountable
includes:
a. Receipt
b. Safekeeping
c. Issuance
d. Repair and maintenance
43

Custodianship
Also includes:
- Accountability
- Responsibility
- Liability
that may arise from loss, misuse, damage
or deterioration of government property
due to fault or negligence in safekeeping.
44

Custodianship
- Bonding of Accountable Officers
(filed with the Bureau of Treasury)
- Insurance of Government Property
The agency head has the
responsibility to insure government
property under the Property
Insurance Fund administered by the
GSIS.
45

Responsibility of the Head of Agency
- financial and other reports and
statements are submitted
- appropriate actions are taken on the
deficiencies noted as contained in the
NS, ND, NC, AOM) and AAR
- the requirements of transactions
suspended in audit are complied with;
- the settlement of disallowances and
charges is made within the prescribed
period.
46

Clearance from money and
property accountabilities in favor of
any employee shall not be
approved, unless all charges,
disallowances and suspensions are
first settled; otherwise, he shall be
jointly and severally liable with the
employee concerned.
47

The head of the agency shall
initiate the necessary
administrative and/or criminal
charges in case of unjustified
failure/refusal to effect compliance
with the above requirements by
subordinate officials.
48

Responsibility of Accountable Officers
Who is an Accountable Officer?
An accountable officer is the
person who by reason of his office
or duty ought to be or deemed to be
in possession or custody of
government funds or property.
49

Responsibility of Accountable Officers
Persons entrusted with the
possession or custody of the funds
or property under the agency head
shall be immediately responsible to
him without prejudice to the
liability of either party to the
government (Sec. 102(2), PD 1445)
50

Responsibility for Proper Use and
Care of Government Property.
The person in actual physical
possession of government property or
entrusted with its custody and control
shall be responsible for its proper use
and care and shall exercise due
diligence in the utilization and
safekeeping thereof. (Sec. 376, R.A.
7160; Section 140 of COA Cir. 92-386)
51

Responsibility on Transfer of
Excess Property
It shall be the duty of every head of the
department or office to turn over to the
general services officer or municipal or
barangay treasurer, as the case maybe,
excess property for reissuance to other
departments or offices. (Section 141 of
COA Cir. 92-386)
52

Accountability of the Head of Agency
1. Accountability for financial and other
resources
2. Accountability for compliance
3. Accountability for efficient and
economical operation, if fraught with
measurement problems.
4. Accountability for program results.
53

Accountability of the Accountable
Officer
Every officer of any government
agency whose duties permit or
require the possession or custody
of government funds or property
shall be accountable therefor and
for the safekeeping thereof in
conformity with law. (Sec. 101(1)
P.D. 1445)
54

Primary and Secondary Accountability for
Government Property
Each head of department or office of a province,
city, municipality or barangay shall be
primarily accountable for all government
property assigned or issued to his department
or office. The person or persons entrusted
with the possession or custody of government
property under the accountability of any head
of department or office shall be immediately
accountable to such officer. ( Sec. 375 (a), R.A.
7160; Section 142 of COA Circular No. 92-386)
55

Primary and Secondary Accountability
for Government Property
The head of a department or office primarily
accountable for government property may require any
person in possession of the property or having custody
and control thereof under him to keep such records
and make reports as may be necessary for his own
information and protection. ( Sec. 375 (b), R.A. 7160;
Section 142, COA Circular No. 92-386)
56

Buildings and other physical structures
shall be under the accountability and
responsibility of the provincial or city
general services officer or the
municipal mayor, or punong barangay,
as the case may be. ( Sec. 375 (c), R.A.
7160; Section 147 of COA Circular No.
92-386)
57

Every officer primarily accountable for
government property shall keep a complete
record of all properties under his charge
and render his accounts thereof
semiannually to the provincial or city
general services officers or the municipal
mayor, or punong barangay, as the case
may be. ( Sec. 375 (c), R.A. 7160)
58

Liability of the Head of Agency
The officer directing any illegal
payment or disposition of the funds
or property shall be primarily liable
for the loss.
59

Liability of the Accountable Officer
Every officer accountable for
government funds shall be liable
for all losses resulting from the
unlawful use, or application thereof
and for all losses attributable to
negligence in the keeping of the
funds (Sec. 105(2), P. D. 1445)
60

Measure of Liability of Persons Accountable for
Government Property
The person immediately accountable for government
property shall be liable for its money value in case of
the illegal, improper or unauthorized use or
misapplication thereof, by himself or any other person
for whose acts he may be responsible, and shall be
liable for all loss, damage, or deterioration occasioned
by negligence in the keeping or use of such property
unless it is proved that he has exercised due diligence
and care in the utilization and safekeeping therefor.
Sec. 377(a), R.A. 7160; Section 149, COA Cir. 92-386)
61

Measure of Liability of Persons Accountable
Unless he registers his objection in writing, an
accountable officer shall not be relieved from liability
by reason of his having acted under the direction of a
superior officer in using property with which he is
chargeable; but the officer directing any illegal
unauthorized or improper use of property shall first be
required to answer therefore. Sec. 377(b), R.A. 7160 ;
Sec. 149, COA Cir. 92-386)
62

Measure of Liability of Persons
Accountable for Government Property
In cases of loss, damage, or
deterioration or government
property arising from, or
attributable to, negligence in
security, the head of the security
agency shall be held liable therefor.
Sec. 377(c), R.A. 7160; Section 150
COA Cir. 92-386)
63

Loss of Government Property
COA has the power to credit losses of property or act
on application for relief of accountability. (Sec. 73 of
P.D. 1445)
Procedures:
1. Immediately notify COA of the loss/damage
2. Within 30 days submit an application for relief
together with the required supporting documents.
64

Physical Inventory
Chief of agencies are required to take a physical
inventory of all equipment and supplies pf their
respective offices at least once a year.
Supplies and materials in stock should be
inventoried at least every six (6) months as of
June 30 and December 31 of each year.

Physical Inventory
Procedures:
1. Plan the inventory taking &
prepare the inventory guidelines
2. Creation of inventory committee
3. Physical Count
4. Reconciliation of property and
accounting records

Reconciliation of property and accounting
records
5. Reconcile the results of the physical count
with the property and accounting records
6. The property or supply officer maintains the
stockcards/property cards while the
accountant maintains the supplies/equipment
ledger cards & control accounts (general
ledger accounts)
7. Inventory committee prepares the required
report on the physical count of inventory and
property plant and equipment.

Property Repair and Maintenance
Repair & Maintenance Program
- Extends the standard economical and useful life of
property & equipment
- Serves as a sound basis for scheduling its
replacement.
- The property unit shall maintain a ledger card
containing the history of the equipment
maintained.

Includes the following:
- Identification of equipment to be repaired
subject to approval by proper authorities. When
repair cost is more than 30% of its FMV-beyond
economic repair.
- Preparation of Request for Pre-repair Inspection
- Conduct of Pre-repair Inspection
- Preparation of Pre- Repair Inspection Report

- Replacement of
Damaged/Unserviceable Parts
- Preparation of Waste Materials
Report
- Conduct of Post Repair Inspection
- Preparation of the Post Repair
Inspection Report

Issuance and Utilization
Responsibilities and Activities in Property
Utilization
1. Preparation of issuance documents
2. Issuance and acknowledgment of items
3. Accounting for the issuance and acknowledgment
of items
4. Preparation of monthly reports
5. Reconciliation of property and accounting
records

Issuance Documents:
Supplies Availability Inquiry (SAI)
Requisition and Issue Slip (RIS)
Purchase Request (PR)
Acknowledgment Receipt for
Equipment (ARE)
Waste Materials Report (WMR)

Section 492, GAAM Vol. 1
Equipment issued by the property officer for
official use of officials and employees shall be
covered by ARE, which shall be renewed every
January of the third year after issue. AREs not
renewed after three(3) years shall not be
considered in making physical count of the
equipment.

Monthly Report of Supplies and Materials Issued
(MRSMI)
- Serves as a monthly abstract of
supplies and materials issued s
evidenced by the RIS.
- At the end of the month, all
MRSMIs shall be consolidated for
the preparation of the JEV.
- Reconcile property and accounting
records

If any property is transferred from
one accountable officer to another:
- The old ARE is returned to the
former holder of the equipment
(Property Officer)
- New ARE is accomplished and
submitted by person to whom the
property is re-issued.

Return of Unused Supplies & Excess Materials
- Unused supplies/scrap materials previously issued
from stock when no longer needed after
completion of the work/project shall be returned
to the property clerk who shall acknowledge
receipt thereof and marked the items “Returned
to Stock”
- JEV shall be prepared to restore the items to stock.

Disposal
Disposal is the end of the life cycle of a
government property.
The following are subject to disposal
a. unserviceable/obsolete property
b. confiscated/seized property
c. property under distraint/levy/garnishment
d. unclaimed motor vehicles
e. real property
f. valueless records/documents

Section 79 P.D. 1445
“When government property has become
unserviceable for any cause and is no longer
needed, it shall upon application of the officer
accountable therefore , be inspected by the head
of the agency or his duly authorized
representative x x x and if found to be valueless
or unserviceable, it maybe destroyed. If found
valuable, it maybe sold at public auction at the
highest bidder under the supervision of the
proper committee on award or similar body x x x.
In the event that public auction fails, the property
maybe sold at a private sale at such prices as
maybe fixed by the same committee or body
concerned.

Disposal
EO. No. 888 Sec I & COA Circular No. 89-296
“ The full and sole authority and responsibility for
the divestment or disposal of properties and
other assets owned by the National, Corporate
and LGUs including its subsidiaries shall be
lodged in the heads of departments, bureaus and
offices or governing bodies or managing heads of
the concerned entities”.

Disposal
Different Modes of Disposal
1. Condemnation/Destruction
2. Transfer of Property
3. Barter
4. Donation
5. Sale of Unserviceable Property
a. Public Bidding
b. Negotiated Sale

Disposal
General Procedures in Disposal:
1. Prepare the Inventory and Inspection Report on
Unserviceable Property
2. The Property Officer shall file an application for
disposal to the COA Auditor with appropriate
documents
3. The COA Auditor inspect the items and determine
if the items are with or without value

Disposal
4. The Head of the Agency forwards the
documents to the disposal committee
5. The Disposal Committee shall recommend to
the Head of Agency the mode of disposal
most advantageous to the government.
6. If found to be valuable the unserviceable
property maybe sold at public auction to the
highest bidder under the supervision of the
proper Committee on Awards or similar
body.

83
Thank you for your
attention &
HAVE A GOOD
DAY!

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Updates on Property Management.ppt

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