Advance Insurance Payments Recognized as Outright Expense
Department of Public Works and Highways · 2023
This summary was generated automatically from the source document and may contain errors. It is not an official interpretation and should not be relied upon as legal guidance. Review the original excerpt and source document to verify before citing or acting on it.
What Happened?
Category: Financial ManagementIssue: Non-complianceThe agency treated insurance paid in advance as a current expense. Since part of the insurance coverage related to future periods, the expense was overstated and the prepaid asset was understated.
Why It Matters
Recommended Actions
No recommendations are available for this finding yet.
Original Audit Finding Excerpt
"Review of the GL of the Insurance Expense account disclosed that advance payments for insurance of various PPE amounting to P1,567,929.24 of Albay 1 st and Albay 2nd DEOs in Region V were recognized as outright expense; hence, the amount corresponding to the unexpired portion of P820,284.91 was not recognized as prepayments as at year end."