RIZAL TECHNOLOGICAL UNIVERSITY

JUNIOR PHILIPPINES INSTITUTE OF ACCOUNTANCY

2ND SEMESTER, 2020-2021
AC16 – ACCOUNTING FOR GOVERNMENT AND NON – PROFIT ORGANIZATION

REFLECTION ON THE GOVERNMENT ACCOUNTING MANUAL VOLUME I

CHAPTERS 10, 11 AND 12

Questions;

1. What needs to be remembered for each chapter and Why?

By taking note on the things written below in each chapters it will guide and help us in
understanding these chapters, how they similar or differ in our previous accounting lesson to
this government accounting and will give us insight on how government are accounting this
topics.

Chapter 10 – Property, Plant and Equipment (PPE):

I read an article which states there that one of the common audit observation or findings
of Commission on Audit (COA) on government property, plant and equipment (PPE) is the
recognition of properties amounting to less than P15, 000 as PPEs in the book of accounts which
is contrary to Section 4, Chapter 10 of the Government Accounting Manual for National
Government Agencies (GAM for NGAs). If your agency is doing this and found by your auditor,
he/she may issue an Audit Observation Memorandum (AOM) by COA.

Briefly, an AOM is an audit document issued by COA to government agencies, usually

called as auditees, to inform them of deficiencies noted in audit related to financial/operational
matters which do not involve pecuniary or monetary loss.

We must also note that the capitalization threshold of P15, 000 represents the minimum
cost of an individual asset recognized as a PPE on the statement of financial position. This
threshold shall be applied on an individual asset or per item basis. Each item within the bulk
acquisition with aggregate or total value of PPE, such as library books, computer peripherals and
small items of equipment, will need to meet the capitalization threshold to be recognized as PPE.

Tangible asset below the capitalization threshold of P15, 000 shall be accounted as semi-
expendable property and shall be recognized as expense upon issuance to end – user.

We must also remember how the PPE must be recognized. PPE that qualifies for
recognition as an asset shall be measured at cost while PPE that acquired through a non-
exchange transaction, its cost shall be measured at its fair value as at date of acquisition.

Chapter 11 – Agriculture

We must remember that Agricultural activity is the management by an entity of the

biological transformation of living animals or plants (biological assets) for sale, into agricultural
produce, or into additional biological assets. Agriculture: Bearer Plants (Amendments to IAS 16
and IAS 41), issued in June 2014, amended the scope of IAS 16 Property, Plant and

NAME: SOPHIA GABUAT CBET-01-601P

 RIZAL TECHNOLOGICAL UNIVERSITY
JUNIOR PHILIPPINES INSTITUTE OF ACCOUNTANCY
2ND SEMESTER, 2020-2021
AC16 – ACCOUNTING FOR GOVERNMENT AND NON – PROFIT ORGANIZATION

Equipment to include bearer plants related to agricultural activity. However, IAS 41 applies to
the produce growing on those bearer plants.

And we must also remember that an entity that prepares and presents financial statements
under the accrual basis of accounting shall apply this Standard for the following when they relate
to agricultural activity: (a) Biological assets; and (b) Agricultural produce at the point of harvest.
This Standard does not apply to: (a) Land related to agricultural activity (see IPSAS 16,
Investment Property and IPSAS 17, Property, Plant, and Equipment); (b) Intangible assets
related to agricultural activity (see IPSAS 31, Intangible Assets); and (c) Biological assets held
for the provision or supply of services.

An entity shall recognize a biological asset or agricultural produce when and only when:
(a) The entity controls the asset as a result of past events; (b) It is probable that future economic
benefits or service potential associated with the asset will flow to the entity; and (c) The fair
value or cost of the asset can be measured reliably.

As we can note, this chapter is almost as same in the Agriculture topic in our CFAS if I
was not mistaken because it was been discussed by Mr. Jeremy. The treatment is almost as same
because IPSAS 27, Agriculture is drawn primarily from IAS 41, the main differences only
between them are the (not limited, I may not include some it is just base on what I read and
understand) IAS 41 includes requirements for government grants relating to biological assets
measured at fair value less costs to sell. IPSAS 27 does not include requirements and guidance
for government grants, because IPSAS 23, Revenue from Non-Exchange Transactions (Taxes
and Transfers) provides requirements and guidance related to government grants in non-
exchange transactions. IPSAS 27 contains requirements for the measurement at initial
recognition, and at each reporting date, of biological assets acquired through a non-exchange
transaction. IPSAS 27 uses different terminology, in certain instances, from IAS 41. The most
significant examples are the use of the terms future economic benefits and service potential,
surplus or deficit, and statement of financial performance in IPSAS 27. The equivalent terms in
IAS 41 are future economic benefits, profit or loss, and statement of comprehensive income.

Chapter 12 – Intangible Assets

IPSAS 31, Intangible Assets is drawn primarily from IAS 38. The main differences
between IPSAS 31 and IAS 38 are first, IPSAS 31 does not require or prohibit the recognition of
intangible heritage assets. An entity that recognizes intangible heritage assets is required to
comply with the disclosure requirements of this Standard with respect to those intangible
heritage assets that have been recognized and also may, but is not required to, comply with other
requirements of this Standard in respect of those intangible heritage assets. IAS 38 does not have
similar guidance. IAS 38 contains requirements and guidance on goodwill and intangible assets
acquired in a business combination. IPSAS 31 does not include this guidance. IPSAS 31 uses

NAME: SOPHIA GABUAT CBET-01-601P

 RIZAL TECHNOLOGICAL UNIVERSITY
JUNIOR PHILIPPINES INSTITUTE OF ACCOUNTANCY
2ND SEMESTER, 2020-2021
AC16 – ACCOUNTING FOR GOVERNMENT AND NON – PROFIT ORGANIZATION

different terminology, in certain instances, from IAS 38. The most significant examples are the
use of the terms “revenue,” “statement of financial performance,” “surplus or deficit,” “future
economic benefits or service potential,” “accumulated surpluses or deficits,”
“operating/operation,” “rights from binding arrangements (including rights from contracts or
other legal rights),” and “net assets/equity” in IPSAS 31. The equivalent terms in IAS 38 are
“income,” “statement of comprehensive income,” “profit or loss,” “future economic benefits,”
“retained earnings,” “business,” “contractual or other legal rights,” and “equity.”

2. What is your take away from each of these chapters? Why?

My take away in these chapters are almost the same because just like in the previous
chapter reflection which I mentioned that it was almost as same as the lesson in our CFAS,
FAR, based on IFRS/PFRS or IAS but there are certain differences that is includes in
government accounting but not included in the other, and vice versa. The meaning also may
change a little bit because this pertains to the public sector or some requirements such as
measurement may change because it’s about public entity and not private but seeing the
overall topic there is a large similarity which we can use as an advantage in better
understanding the government accounting,

NAME: SOPHIA GABUAT CBET-01-601P

 RIZAL TECHNOLOGICAL UNIVERSITY
JUNIOR PHILIPPINES INSTITUTE OF ACCOUNTANCY
2ND SEMESTER, 2020-2021
AC16 – ACCOUNTING FOR GOVERNMENT AND NON – PROFIT ORGANIZATION

REFERENCES:

 Dayag, A. (2021). Advanced Financial Accounting. 2021 Editions. Good Dreams

Publishing.
 Commission on Audit (2017). Government Accounting Manual for National Government
Agencies Volume 1 Accounting Policies, Guidelines and Procedures and Illustrative
Accounting Entries.
https://www.coa.gov.ph/phocadownload/userupload/Issuances/Circulars/Circ2015/GAM
_for_NGAs_Volume_I.pdf
 Gabotaf (2020, May 3). Common COA Audit Findings on Government Property, Plant
and Equipment (PPE). https://gabotaf.com/2020/05/03/common-coa-audit-findings-on-
government-property-plant-and-equipment-ppe-recognition-of-government-properties-
amounting-to-less-than-p15000-as-ppes/
 Ifrs.org (2011). IPSAS 27—AGRICULTURE.
https://www.ifac.org/system/files/publications/files/B3%20IPSAS_27_0.pdf
 Ifrs.org (2011). IPSAS 31—INTANGIBLE ASSETS.
https://www.ifac.org/system/files/publications/files/B7%20IPSAS_31.pdf

NAME: SOPHIA GABUAT CBET-01-601P