Non-Reclassification of Completed Construction in Progress to Property, Plant and Equipment
National Housing Authority · 2024
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What Happened?
Category: Financial ManagementIssue: Non-complianceNHA finished building projects worth about P120 million but left them in the 'under construction' account instead of moving them to the proper asset account. This caused depreciation to be understated and made the financial statements wrong.
Why It Matters
Recommended Actions
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Original Audit Finding Excerpt
"Completed and operational projects from the CIP-Building and Other Structures account totaling P119.742 million were not reclassified to their appropriate PE accounts resulting in the overstatement of Accumulated Surplus by P2.507 million and understatement of Depreciation Expense and Accumulated Depreciation by P3.599 million and P6.106 million, respectively, due to the non-recognition of corresponding depreciation."