When an agency pays insurance covering more than one accounting period, it should record only the expired portion as an expense and keep the rest as a prepaid asset. The agency expensed the full payment and also placed the documentary stamp tax in the wrong account, so the financial statements were wrong.

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Original Audit Finding Excerpt

"180 1.103 Sound accounting practice dictates that, capitalized expenditures whose projects were already completed should be reclassified to the appropriate asset accounts together with the cost of the said projects. 1.104 Moreover, the late recording of completed projects in the appropriate infrastructure accounts is not in accordance with Section 8(g), Chapter 10, Volume I of the GAM for NGAs, which requires recognition of completed projects in the books of the agency upon project completion. 1.105 Additionally, the COA -Government Accountancy Sector stated in its Memorandum dated April 17, 2017, that the recognition of the CIP and the corresponding Accounts Payable equivalent to the unbilled amount and the transfer of the whole amount of the project from the CIP account to the appropriate PPE accounts shall be based on the C ertificate of 100% Completion. These documents are to be issued by authorized officials, such as the Project Management Team or Project Engine"

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