Republic of the Philippines

COMMISSION ON AUDIT
Region XI, Davao City

Office of the Audit Team Leader

NGS Cluster 4 – Defense and Security
Audit Group 4J & 4K – Audit Team R11-11
DPPF Receiving Station, JP Laurel Ave., Davao City

AUDIT OBSERVATION MEMORANDUM (AOM)

AOM No.: DPPF-2020-006(19)

February 18, 2020

JSUPT. ALBERTO R. TAPIRU JR.

Jail Superintendent
Officer-in-Charge
Bureau of Corrections
Davao Prison and Penal Farm
B. E. Dujali, Davao del Norte

Attention: Ms. Julie Joy B. Divinagracia

Designated Head, Finance Division

Ms. Dophene P. Delmo-Gadia

Accountant

We have reviewed the Construction in Progress Account in the General Fund and
observed the following deficiency:

1. Completed Projects totaling P 26,441,436.24 were not reclassified to its appropriate Commented [J1]: Please check the correct figure for this
asset account contrary to Section 8(g), Chapter 10 of the Government Accounting Manual would not reconcile in your table (See the body of this
AOM).
(GAM), Volume I, thereby affecting the reliability of the balance of Construction in
Progress (CIP) – Buildings and Other Structures account reflected in the financial
statements, as at December 31, 2019.

2. Section 8(g), Chapter 10 of the Government Accounting Manual (GAM) for National
Government Agencies, Volume I states that:
“x x x As soon as the construction is completed, the “Construction in Progress” account
shall be reclassified to the proper asset account.”
3. Inquiry with the focal person of the General Services Section revealed that the
construction of all infrastructure projects was completed as of the end of CY 2019. However, the
financial statements showed that the CIP account had a balance of P 26, 441,436.2, viz:

DPPF AOM No. 2020-006(19) 1

 Account Description Date Amount Particulars

Construction in
Progress- Building
and Other Structures 1/1/2019 17,440,870.30 Beginning Balance Commented [J2]: Kindly show the details of the beginning
Payment to Contractor (R. balance, showing the following details.
Semilla) for Expansion of 1)Description of the project
Prison Compound Perimeter 2)Date completed
3)Amount
5/15/19-12/27/19 9,000,565.91 Fence
4)Remarks

TOTAL 26,441,436.21

4. Validation disclosed that the Accounting Unit failed to maintain a Construction in

Progress Ledger Card (CIPLC) for projects under the general fund cluster. The Accounting Staff
in charge only records construction costs during payment of progress billings through Journal
Entry Vouchers (JEV). Had the Accounting Staff maintained a CIPLC and records promptly the
construction costs and other information about the asset constructed in the CIPLC, it could have
been a tool to determine whether or not a specific project is already completed thus avoiding the
accumulation of completed projects in the Construction in Progress account.

5. Failure to reclassify the cost of completed buildings resulted in the overstatement of

Construction in Progress (CIP) and understatement of the Office Building and Other Structures
account by P 26,441,436.24. This also resulted to understatement of depreciation expense and its Commented [J3]: Please check on the correct figure for
corresponding accumulated depreciation account. your table showed P26,441,436.21, thus a difference of
P0.03.
Please make the necessary corrections.
6. We recommend that Management:

a. Direct the Accountant to immediately reclassify the enumerated completed

projects, totalling P 26,441,436.24, to the appropriate Buildings and Other
Structures account.

b. Direct the Accountant to closely monitor the CIP account through the
maintenance of Construction in Progress Ledger Card (CIPLC) and reclassify
all completed projects to its appropriate asset account.

c. Direct the Accountant to compute for the supposed net book value of the above-
enumerated completed buildings, and accordingly adjust the recorded book
balances thereof.

7. May we have your comments on the foregoing audit observations within five (5) days
from receipt hereof.

DPPF AOM No. 2020-006(19) 2

 ROSELYN L. SALUDARES
State Auditor IV
Audit Team Leader

JULIA S. QUISAOT
State Auditor V
Regional Supervising Auditor

Proof of Receipt of AOM:

Name/Position : _______________________

Date : _______________________

DPPF AOM No. 2020-006(19) 3