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Cebu News

COA notes violations in CPA operations

- Garry B. Lao -

CEBU, Philippines - The lack of efficient fiscal management apparently hounds the Cebu Port Authority (CPA), which, state auditors noted, could result in potential losses amounting to millions of pesos. The Commission on Audit (COA) uncovered several lapses in the way CPA manages its funds.

For instance, the state auditors discovered that past due accounts receivable from port users amounting to P5.7 million remain uncollected, resulting in the accumulation of unsettled accounts.

Verification of the accounts receivable as of July 31, 2010 disclosed that P5,766,599.91 or 38.37 percent of the total outstanding accounts receivable of P15,028, 808.31 from companies granted deferred credit payment privileges have become past due, which ranged from three months to more than 31 to over 365 days, said State Auditor Asuncion de la Peña.

Also, the interest and penalty charges on delinquent accounts amounting to P765,111.48 were not imposed.

According to de la Peña in her report, CPA Administrative Order No. 01-2003 provides that “interest and penalty charges shall be imposed on all bills not paid and settled within 15 days after receipt of bills for private accounts and 30 days for government accounts or after the port dues and or charges become due and demandable.”

“Further, examination of the accounting records showed that some port users made advance payment/deposit to answer for whatever unpaid obligations they have with CPA,” the report read.

As of July 31, 2010, the total advance payment accounts of P5.8 million, which started some years back, were not applied to unsettled accounts and remained as deferred credits in the book of accounts.

The CPA management explained to COA that some past due accounts were still covered by deposits advanced by port users and they offset these only at the end of the year to avoid multiple adjustments.

 But COA advises the management to ask concerned port users to replenish their deposits regularly and intensify their collection efforts of past due accounts by sending collection letters and if warranted, institute legal action against delinquent port users.

Another lapse was CPA’s expenditures for major repairs of port facilities in the amount of P201,591,051.43, which were not capitalized and resulted in the understatement of Property, Plant and Equipment (PPE) accounts and the overstatement of repairs and maintenance expenses.

Under the International Accounting Standards (IAS )/Philippine Accounting Standards (PAS), an item of PPE should be recognized as an asset when “it is probable that future economic benefits associated with the asset will flow to the enterprises and the cost of the asset to the enterprise can be measured.”

Dela Peña said the cost incurred for the major repairs of port facilities at different out ports for improvements of existing port facilities in the amount of P201,591,051.43 was recorded as repairs and maintenance expense, instead of being capitalized as new or part of the carrying cost of the asset.

“It is evident that these expenditures benefit operations beyond the current period and should be recorded as an asset,” the report read, adding that an incorrect charge to expense instead of asset resulted in the understatement of income/earnings and assets.

The CPA’s finance division explained to COA that expenses for major repairs were charged to maintenance and operating expenses instead of capital outlay to avoid the payment of higher income tax and dividend to be remitted to the National Treasury, as the method of charging to capital outlay affects the cash management of the authority. — (FREEMAN)

vuukle comment

ACCOUNTS

ADMINISTRATIVE ORDER NO

AS OF JULY

CEBU PORT AUTHORITY

CPA

DELA PE

NATIONAL TREASURY

PHILIPPINE ACCOUNTING STANDARDS

PLANT AND EQUIPMENT

PORT

STATE AUDITOR ASUNCION

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