COMMISSION ON AUDIT CIRCULAR NO.

82-92-H October 27, 1982

TO : All Heads of Ministries, Bureaus and Offices of the National Government,

including State Universities and Colleges; Managing Heads of Government-
Owned and/or Controlled Corporations, Boards and Commissions; Chief
Accountants/Corporate Treasurers; Metro Manila Commission/Provincial
Governors, City/Municipal Mayors; Local Treasurers/Accountants; COA
Managers/Regional Directors, Auditors and All Others Concerned.

SUBJECT : Amendment of COA Circular No. 78-92 dated November 14, 1978as amended,
re: Standard Government Chart of Accounts and guidelines for accounting and
reporting unused construction materials and scrap construction materials of
completed infrastructure/construction projects.

1.0 PURPOSES

1.1 To prescribe accounts for recording unused construction materials of completed

infrastructure/construction projects and income from sales of scrap construction
materials.

1.2 To prescribe reporting forms and accounting guidelines for unused construction
materials and scrap construction materials.

2.0 NEW AND EXPANDED ACCOUNTS

2.1 The Standard Government Chart of Accounts is hereby amended to include the
ffollowing accounts:

8-72-732 Inventories- Unused Construction Materials Charge to Capital Outlay

This account is used to record the unused construction materials after the
completion of the project for which these were purchased.

Debit this account for:

Unused construction materials after the completion of each

infrastructure/construction project.

Inventory shortage or deterioration which is duly authorized (debit in

parenthesis in the books of national and local government agencies).

Credit this account for:

Release of the above items for use by other infrastructure/construction

projects.

Sale of the above items.

 Inventory shortage or deterioration which is duly authorized (in the books
of corporations).

1-58-250 Miscellaneous Income - Sale of Scrap Construction Materials

This account includes proceeds from sales of scrap construction materials such
as the materials use in the construction of temporary offices and storehouses of
the project, construction frameworks, and the like.

2.2 The definition of account 7-92-419- Current Surplus Unappropriated - Surplus

Adjustments - Others shall be expanded to include the following among the items
in -

Credit this account for:

Adjustments for unused construction materials of completed projects

charged to capital outlay in current or prior years.

3.0 GENERAL GUIDELINES

3.1 The project engineer or equivalent official of the infrastructure/construction

project shall report the unused construction materials and scrap construction
materials immediately after the completion of each project. For this purpose, the
Report of Unused/Excess Construction Materials, Annex A and Report of Scrap
Construction Materials, Annex B shall be used. He shall either (1) turn over to
the Property Officer concerned all materials indicated as retained in the two
reports or (2) attach to the reports duly accomplished Memorandum Receipt
signed by the employee who has custody of them materials.

3.2 The Property Officer shall sign four copies each of the two reports submitted by
the Project Engineer to acknowledge receipt of the retained materials. He shall
distribute the reports as follows:

Original - to the Chief Accountant Concerned

Duplicate - to the Cost Accountant concerned
Triplicate - to the Project Engineer concerned
Last Copy - to be retained by the Property officer

Subsequent issues of these materials shall be covered by duly approved

Requisition and Issue Voucher. In the case of materials covered by
Memorandum Receipt, the employee concerned shall demand from the Property
Officer the return of his Memorandum Receipt before issuing the materials in his
custody to the requisitioner.

3.3 Unused construction materials charged during the current year against the
allotments/appropriations of a completed project, if transferred to another on-
going project within the agency, shall be adjusted to transfer the charges against
the allotments/appropriations of the said project.
 3.4 Unused construction materials charged during the current year against the
allotments/appropriations of a completed project, if not needed by any other on-
going project within the agency, shall be taken up under account 8-72-732.

3.5 Unused construction materials charged in prior years against the

allotments/appropriations of a completed project, although needed by another
on-going project within the agency, shall first be taken up under account 8-72-
732 before these are charged against the allotments/appropriations of the latter
project.

3.6 Unused construction materials transferred to other government agencies shall be

charged against the pertinent allotment/appropriation of the transferee and paid
to the transferor, which in turn shall take up the payment as a reduction in its
expenses, if the obligation for such materials was incurred during the current
year; and as income, if the obligation was incurred in prior years.

3.7 Unused construction materials may be sold in accordance with existing rules,
regulations and procedures if it will be uneconomical to transfer or store such
materials.

3.8 Scrap construction materials retained for use, as indicated in the Report of Scrap
Construction Materials, shall be taken under account 8-72-900 Inventories -
Miscellaneous.

3.9 Issues of scrap construction materials shall not be charged against the
allotments/appropriations of the user project/service; however, it shall be added
to the cost of the completed project/article as an invested surplus adjustment.

4.0 ACCOUNTING ENTRIES

The accounting entries to record the expenditures for construction projects, the transfer
of unused construction materials to other projects or to the inventory account 8- 72-732,
the closing of the construction in process account to the completed project account, the
issue of unused construction materials to other on-going projects, the proceeds from
sales of unused construction materials, and the transfer, issue and sale of scrap
construction materials are prescribed in Annexes C, D and E hereof.

5.0 REPEALING CLAUSE

The provisions of all circulars, instructions and orders which are inconsistent with the
provisions of this circular are hereby rescinded or modified accordingly.

6.0 EFFECTIVITY

This circular shall take effect immediately.

(SGD.) SILVESTRE D. SARMIENTO, Commissioner

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