The PPE balance is understated by about 8.7 billion pesos because many assets were not recorded, some repairs were not capitalized, and some assets were not properly removed or classified.

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Original Audit Finding Excerpt

"The reported balance of Property, Plant and Equipment (PPE) account is net understated by P8,737,985,016.80 due to: (a) non-recording of PPE acquired through procurement, turnover and transfer, and completion of infrastructure projects totaling P9,300,711,870.39; (b) non-capitalization of major repairs and improvements of infrastructure assets, buildings and other PPE in the total amount of P104,835,016.04; (c) non-capitalization of expenditures charged against Engineering and Administrative Overhead aggregating P26,616,504.08; (d) non-derecognition of transferred infrastructure projects totaling P28,420,000.00; (e) non-derecognition of lost, replaced and demolished assets amounting to P564,375,015.06; (f) improper recording of unserviceable equipment in the amount of P32,791,383.91; (g) misclassification of semi-expendable property as PPE amounting to P59,322,381.85; (h) non-reclassification of Construction in Progress (CIP) to appropriate PPE accounts; (i) misclassification within PPE accounts; and (j) other errors/omissions in recording PPE in the aggregate amount of P9,269,592.89."

Source Document