Net Overstatement of Prepayment Accounts
Department of Public Works and Highways · 2024
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What Happened?
Category: Financial ManagementIssue: Non-complianceThe agency's prepayment balances were incorrect: some contractor advances were not reduced when recovered, and some prepaid insurance was expensed immediately instead of being spread over time.
Why It Matters
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Original Audit Finding Excerpt
"f) Net Overstatement of Prepayment accounts due to: • Net Overstatement of Advances to Contractors accounts due to: (i) non-recording of recouped/recovered advances to contractors; and (ii) erroneous recording of advances to contractors account • Net Understatement of Prepaid Insurance accounts due to: (i) unexpired portion of insurance prepayments recognized as an outright expense; and (ii) misclassification of insurance prepayments 341,065.59 Advances to Contractor Accumulated Surplus/(Deficit) CIP account Guaranty/Security Deposits Payable (GSDP) Prepaid Insurance Insurance Expense Taxes, Duties and Licenses (1,317,324.65) (32,696.77) 1,059,520.00 (225,107.88) 976,259.06 (1,184,833.06) 208,574.00 ✓"