Adjustments for IPSAS 37 and 38 on Joint Arrangements
National Housing Authority · 2024
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What Happened?
Category: Financial ManagementIssue: Non-complianceThe company corrected its accounting for joint ventures and related revenue shares, affecting several accounts.
Why It Matters
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Original Audit Finding Excerpt
"In compliance with IPSAS 37 on Joint Arrangements and IPSAS 38 on Disclosure of Interests in Other Entities, certain accounts were reclassified and adjusted to appropriately reflect the accounting treatment for transactions related to the initial contribution of land under a JVA, and the receipt of revenue shares from the Residential Pump Priming Projects. The adjustments were made to correct the prior erroneous application of the equity method, due to the absence of joint control between the parties, which is a key requirement under IPSAS 37 for the use of such method. The necessary reclassifications and restatements are as follows: Investments in joint venture: decreased by P4.268 billion; Merchandise inventory: increased by P747,070; Revaluation surplus: decreased by P6.127 billion; Investment property: previously understated by P990,573; Accumulated surplus: increased by P1.825 billion; Other income: increased by P36.301 million and P7.195 million in CY 2024 and 2023, respectively; Loss on sale of investment property: increased by P946,485."