Audit finds CUC didn’t count ‘assets’ in 2016
Tag: BCM, business, CUC, Typhoon Soudelor
The Commonwealth Utilities Corp. has not counted its fixed and capital assets or equipment and real property for the year 2016, according to an independent report released last week by the Office of the Public Auditor.
Conducted by independent auditing firm Burger, Comer, Magliari, the internal audit showed that CUC has not conducted a physical count of its capital assets as of Sept. 30, 2016. It further said that since a physical count has not been conducted, the asset list may not include assets that have been retired, broken, idle, destroyed, or stolen.
Fixed and capital assets must be recorded accurately by a business and the current estimated value of these assets should be reflected to provide accurate financial statements. Without accurate asset records, a business’ financial balance sheet will be incorrect.
Auditors of Burger, Comer, Magliari recommended that a regular count of the fixed assets must be performed and this should be in agreement with the records. However, BCM understands CUC’s financial situation and stated that conducting cycle counts or when inventory is counted on a specified day per division/location to minimize overtime is satisfactory.
BCM also recommended for CUC to consider evaluating capital assets for impairments and recoverability of carrying values.
In his response to the audit in December last year, CUC chief financial officer Antonio B. Castro said that CUC agrees with the “fixed assets” findings and made it clear that CUC did a physical count of all fixed assets in June 2017.
“…Independent auditors are reviewing the fixed assets damaged by Typhoon Soudelor and reconciling the list with the purchases made to replace the damaged and condemned fixed assets and recommended to do another count of fixed assets for inclusion in the FY 2017 Audit of Financial Statements.
“CUC is currently evaluating its capital assets for impairment due to damage, obsoleteness and retired,” he added.
Castro pointed out that CUC is currently expanding its Microsoft Dynamics GP software. “This will manage the assets that could track cost, depreciating and funding source for each asset…this will also include the ability to calculate for complete or partial retirement and depreciation cost for a single asset or group and will improve efficiency.”
BCM’s findings on CUC capital assets or “Equipment and Real Property Management stated that a physical count had not been conducted as of Sept. 30, 2016, and has no basis to determine if the carrying value of its capital assets is accurate. The auditors recommend that a physical inventory take place.
CUC agreed with the findings and made it clear that CUC conducted a physical count of all its fixed assets in June 2017.
Castro added that at present, CUC is reconciling the fixed asset count with the general ledger to ensure that correct valuation and depreciated costs are applied.
Other improvements that CUC is working on are ensuring that travel authorizations are in compliance with policies and procedures, CUC Human Resources Department shall document employees’ status, and rates on employment contracts or notices of personnel action, and overtime forms are properly approved and signed.