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COMMISSION ON AUDIT CIRCULAR NO.

80-124 January 18, 1980


TO

All Managing Heads, Resident Auditors of Government- Owned or Controlled


Corporations and Subsidiaries including Self-Governing Boards, Commissions,
Agencies and State Colleges and Universities and Others Concerned.

SUBJECT :

Inventory of Fixed Assets of Government-Owned and/or Controlled Corporations


and Subsidiaries, including self-governing boards, commissions, agencies and
state colleges and universities.

I.

PURPOSE:
Physical inventory-taking being an indispensable procedure for checking the integrity
of property custodianship has to be regularly enforced. In line with this and to
operationalize the provisions of Section 102 of the Government Auditing Code of the
Philippines (P.D. 1445), this circular is issued.

II.

SCOPE
This circular prescribes the rules and regulations for the inventory of fixed assets of
all government-owned and/or controlled corporations and subsidiaries, including selfgoverning boards, commissions, agencies and state colleges and universities.

III.

RESPONSIBILITY AND ACCOUNTABILITY:


The head of government-owned and/or controlled corporations and subsidiaries
including self-governing boards, commissions, agencies and state colleges and
universities shall exercise the diligence of a good father of a family in supervising
accountable officers under his control to prevent the incurrence of loss of government
property, otherwise he shall be jointly and solidarily liable with persons primarily
accountable therefor.
Fixing of primary responsibility and accountability of government property to the head
of the agency is in line with keeping the discharge of fiscal responsibility with the head of
the government agency. Basic responsibility cannot and must not be shifted from the
government agency concerned
to any official and/or personnel of the Commission on Audit.
Persons entrusted with the possession or custody of the property under the agency
head shall be immediately responsible to him without prejudice to the liability of either
party to the government.
Every officer accountable for government property shall be liable for its money value
in case of improper or unauthorized use or misapplication thereof, by himself or any
person for whose acts he may be responsible as provided for under Sec. 105 of PD 1445.
He shall likewise, be liable for all losses, damages, or deterioration envisioned by

negligence in the keeping or use of the property whether or not it be at the time in his
actual custody.
Every officer of any government agency whose duties permit or require the
possession or custody of government funds or property shall be accountable therefor and
for the safekeeping thereof shall be properly bonded in accordance with law.
Failure on the part of the officials concerned to submit the inventory reports
mentioned herein shall automatically cause the suspension of payment of their salaries
until they shall have complied with the requirements pursuant to Sec. 122 of PD 1445.
IV.

PERIOD OF INVENTORY:
Physical inventory of fixed assets shall be made at least once a year as of December
31 in accordance with the guidelines enumerated herein.
Inventory reports of regional/branch offices, shall be submitted to the head of the
agency not later than January 20 for consolidation and the consolidated inventory shall be
submitted to the Auditor not later than January 31 of each year, unless extended by the
Chairman upon prior request of the head of agency concerned.

V.

GUIDELINES FOR INVENTORY-TAKING:


1.

Creation of Inventory Committee

A committee shall be formed to take charge of the physical inventory-taking,


consisting of two or more employees designated by the head of the agency including the
property/administrative officer or custodian depending on the extent of his accountability.
A representative of the Auditor shall witness the inventory-taking.
2.

Property Identification and Coding

Government property shall be properly labelled and identified by the Inventory


Committee. Inventory labels of special materials shall contain among others the individual
property number to be provided by the corporation concerned. These numbers shall be
uniformly printed in India Ink, to achieve permanence and best results, and shall be posted
on a prominent but secure portion of the property for easy identification.
3.

Memorandum Receipt

An officer or employee who receives and is in actual possession or physical control


of the property shall sign a Memorandum Receipts (Gen. Form No. 32) for such property
and shall be accountable therefor. Such Memorandum Receipts for property in the
custody of an officer or employee shall be renewed every three years.
4.

Inventory Reports

All inventory reports shall be prepared on the prescribed form (Gen. Form No. 41-A)
and certified correct by the committee in charge thereof, noted by the Auditor and
approved by the head of the agency. The reports shall be properly reconciled with
accounting and inventory records.

VI.

REPEALING CLAUSE AND EFFECTIVITY:


All circulars, orders, memoranda and existing rules and regulations inconsistent
herewith are hereby repealed or amended accordingly.
This circular shall take effect immediately.

(SGD.) FRANCISCO S. TANTUICO, JR., Acting Chairman