Premature Recognition of Liquidations for Ongoing Projects
Department of Public Works and Highways · 2024
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What Happened?
Category: Financial ManagementIssue: Non-complianceThe agency paid contractors for projects that aren't finished yet, but then treated those payments as if the project was complete and reduced the amount it owes. This made their financial statements look better than reality by a huge amount.
Why It Matters
Recommended Actions
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Original Audit Finding Excerpt
"The reported balance of the Inter -Agency Payables accounts is understated by P3,968,672,689.38 due to erroneous recognition of liquidations for ongoing or incomplete projects, contrary to Sections 63(f) and 17, Volume I of the GAM for NGAs. This premature reduction of liabilities, based on submissions from Implementing Agencies instead of actual project completion and turn over, resulted in understated Due to NGAs and Due from Regional Offices/Operating Units accounts, compromising the accuracy of financial reports."