PSMS

Engineer Reymax F. Bosque

October 16-19, 2018

1
Phases of Property and Supply
Management

Acquisition

Utilization

Disposition

2
 DISPOSAL /
DISPOSITION

a procedure to
the end of the life cycle
eliminate confiscated
of a government
non-government
property
property

3
Disposal

“When government property has

become unserviceable for any
cause and is no longer needed, it
shall upon application of the officer
accountable therefore , be
inspected by the head of the
agency or his duly authorized
representative x x x and if found to
be valueless or unserviceable, it
maybe destroyed….”
Section 79 P.D. 1445
4
 Disposal

“…. If found valuable, it maybe sold

at public auction at the highest
bidder under the supervision of the
proper committee on award or
similar body x x x. In the event that
public auction fails, the property
maybe sold at a private sale at such
prices as maybe fixed by the same
committee or body concerned.”
Section 79 P.D. 1445
5
Disposal Objectives

to avoid continuing carrying/inventory

costs

to prevent further deterioration

to obtain fair return in case of sale

to relieve accountable officers of

unnecessary accountability

to make available space for the agency

7
Determination of Disposable
Property
2.Maintenance/
1.It can no longer
repair costs more 3.It is obsolete or
be repaired or
or outweighs the outmoded
reconditioned
benefits derived

4.Unnecessary
due to change in 6. It has become
5. It is in excess
Agency’s dangerous or
of requirements
functions/ hazardous to use
mandate

8
Disposal

 authority and responsibility

for divestment or disposal of
properties and other assets -
head of agency
EO 888 Sec 1 & COA Cir. 89-296;
COA Cir. No. 92-386 (LGUs)

9
General Procedures in Disposal:

Disposal
Committee
Head of the recommends
Agency mode of
forwards disposal to
COA Auditor documents to
inspects to Agency
Disposal Head
determine Committee
Property with or
Officer files without value
application
for disposal
Property to COA
Officer Auditor
prepares

and SDs
Duties and Responsibilities of Agency
Officials in Disposal

Submit a copy of the

Inspection Report of
Unserviceable
Property to the
Auditor immediately
after inspection.

COA Circular 95-006

Section 6.09 11
Duties and Responsibilities of Agency
Officials in Disposal

Furnish the Auditor with

the schedule or notice of
opening of bids and
condemnation/destruction
of government property
at least five days before
the scheduled time.
COA Circular 95-006
Section 6.10 12
 Guidelines on the Divestment or
Disposal of Assets (COA Circular 89-296)

1. Constitute the
• Gather list of assets to be disposed of: program for
disposal, IIRUP/RWM, appraisal documents, disposal
procedures to be adopted
• Inspect assets
• Establish the floor price/appraisal of property
• Recommend mode of disposal

2. Furnish COA Auditor at least five days

before the scheduled bidding with
copies of program for disposal,
IIRUP/RWM, appraisal documents &
disposal procedures 13
3. Advertise by printed notice for
not less than three consecutive
days in any newspaper or by
notices posted for a like period in
at least three prominent public
places in the locality.
4. Pre-qualify bidders - 10% bond,
latest FS, ITR.
5. Constitute the to
conduct the public bidding.
14
FUNCTIONS OF THE BAC
MODES OF DISPOSAL
Public Bidding

Negotiated Sale

Transfer

Barter

Donation

Condemnation/Destruction
19
Public Bidding/Auction
• Sealed Public Bidding
• Viva Voce

adequate publicity and notification

sufficient time frame between publication
and date of auction
opportunity to inspect the property
confidentiality of sealed proposals
bond and other pre-qualification
requirements
fair evaluation of tenders and proper
notification of award
20
 Sale thru Negotiation

There was failure of public

auction.
The negotiation may be conducted
singly provided that government
gets the best price.
A record of proceedings must be
maintained.
The negotiated price shall not be
lower than the highest offer
submitted at the failed public
auction. 21
• Transfer of Property between
government agencies (with or
without cost) – Property Transfer
Report
• Barter ( exchange for another piece
of property)
• Donation ( to charitable, scientific,
education or cultural associations,
NGOs)
• Condemnation/Destruction
(valueless, unsalable or hazardous
property)
22
 FLOWCHART ON THE DISPOSAL OF PROPERTY
AGENCY OFFICIALS COA
Property Officer / Admin. Officer / Accounting / Disposal Committee / BAC ON DISPOSAL / Director/AH / Auditor / Tech. Services Office

1. Prepares the
1. Conducts the insp. Approves the Forwards the
detailed list of
& appraisal Disposal Program documents to
unserviceable Reviews/Evaluates 2. Prepares the TSO/Technical
property, IIRUP and the documents Appraisal Report Staff for appro-
WMR. If property is
priate action
eqpt., attach the Conducts the
Eqpt. Ledger Card. bidding
Appraisal Report 1-3
2. Takes pictures of Eqpt. Checklist 1-2
the subject property. I & I Report 1-3 1. Reviews attached
Y Appraisal Report 1-2 Documents
Eqpt Ledger Card 1
E Evaluates Eqpt. Checklist 1 2. Conducts Insp. &
Pictures 1-2
S the bids I & I Report 1-2 Appraisal
Data/
Data/
Documents
Eqpt Ledger Card 1 3. Prepares
IIRUP 1-3
Documents Pictures 1 Appraisal Review
Eqpt. Ledger Card 1 Complete Report
Pictures 1-2 Failed
- Bidding Indorses the
NO •Submits the Disposal NO
Information /
Program
YES notification
A •Schedules the bidding
Conducts the bidding
Evaluates the bids
COA Appraisal
A
Appraisal Rep. 3 Review Report 1-2
Failed NO Eqpt. Checklist 2 Appraisal Rep 3
2nd I & I Report 3 Eqpt. Checklist 2
Biddin Pictures 2 I & I Report 3
Supplies/Attaches
g Pictures 2
the additional Provides the following data
data/documents YES
on IIRUP
- Unit Cost
Negotiates
- Total Cost the sale
- Accumulated Depreciation
Post Audit
- Carrying Amount

Recommends Approves 23
the award the award
LEEZS/051304Th
 Guidelines in the Claim of
Award / Withdrawal of Property
Claims shall be made only by
the Awardee after full payment.

The Property Officer shall accomplish a Tally-Out

Sheet to be acknowledged by the Awardee.

Claims shall be made only

during official working hours.

Claims shall be made within the period fixed by the

Disposal Committee but not more than 30 days
after awarding.
24
 Matrix of Differences
ACQUISITION DISPOSITION
Need Not needed
PPMP/APP IIRUP/WMR/Disposal Plan
BAC/TWG Disposal Com./BAC
ABC – ceiling Appraised V – floor
LCRB/HRRB Highest Offer
Single CRB At least 2 bidders
Modes (Procurement) Modes: Public Auction,
PB, LSB, Negotiated Negotiated Sale,
Proc., Direct C, Transfer, Barter,
Shopping, Repeat O Donation, Condemnation
25
Responsibilities of the
Auditor in Disposal
Attend opening of bids, condemnation and
destruction as observer. (inputs in post-
audit) (COA M 95-088)

Upon receipt of IIRUP/WMR, inspect

properties or refer the same to the TS.

Review legality and propriety of disposal in

post-audit.

Seek assistance of TS in determining

reasonableness of appraised value. (COA
Memo. 024, s.1998)
Responsibilities of the
COA TS in Disposal
Inspect property for disposal and
prepare Inspection Report
containing, among others, his
findings/ observations to be
transmitted to the Auditor concerned.

Review appraisal/valuation report of

the agency and prepares report
thereon, which shall include: a.
Computation of Appraised Value b.
Price Reference c. Recommendation

(COA Memo 024, Aug.05, 1998)

Responsibilities of the
COA LAO in Disposal
B. Legal and Adjudication
4. Assume responsibility over all activities
inherent to the discharge of the adjudication
functions including but not limited to the
following matters:
4.3 Requests for approval of price in
private sale or negotiated sale of
government property after failure of
public auction/bidding;

COA Resolution No. 2004-001 dated Jan. 09,2004 –Re:

Delineation of the Auditing and Adjudication Functions
APPRAISAL

29
Appraisal - art of estimating the fair exchange
worth of a property as of a specified date,
supported by relevant and factual data.
Appraisal may or may not be
accurate depending on:
Basic competence and
integrity of appraiser

Soundness and skill with

which he/she uses the
data
Availability of pertinent
data
30
Appraised Value -
an estimate or opinion of value of a
described property as of a specific date
transmitted in writing and supported by
relevant and factual data
Situations where appraisal is needed:
• transfer of ownership
• financing and credit
• just compensation in
sale or condemnation
procedures
• basis for
taxation/taxes

31
 Revised GUIDELINES
on Appraisal of Government
Properties
except Real Estate, Antique
Property and
Works of Art

COA Memo 98-569-A dated Aug. 5, 1998

32
 DEFINITION OF TERMS
CONDITION FACTOR - adjustment factor
used to consider the actual condition of the
property under appraisal thru an evaluation of
the state or condition of the major components
of such property relative to an ideally
functioning model.
CURRENT MARKET VALUE(CMV) – the
price estimated which the property will bring if
exposed for sale in the open market, allowing
a reasonable time to find a buyer who buys
with knowledge of the actual condition of the
property.
35
 DEFINITION OF TERMS
FAIR MARKET VALUE – probable price at which
a willing buyer will buy from a willing seller when
both are unrelated and know the relevant facts
ACQUISITION COST – the price at which the
property were acquired.
REPLACEMENT COST NEW (RCN) – price of
comparable or similar new property for current
year.
CURRENCY FLUCTUATION FACTOR (CFF) –
refers to the adjustment factor used to take into
account the devaluation or revaluation of the peso
from year of acquisition to the year of appraisal
36
 DEFINITION OF TERMS
PRICE INDEX FACTOR (PIF) – refers to the
adjustment factor which reflects the changes that
occur in the prices of commodities, raw materials,
manufactured goods and the like from year of
acquisition to the year of appraisal.
EFFECTIVE USEFUL LIFE (EUL) – refers to the
estimated period of time in years for which the
property is anticipated to be useful assuming
normal utilization.
EFFECTIVE REMAINING USEFUL LIFE (ERUL)
– refers to the period of time in years from the date
of appraisal to the date when the property
becomes non-operational.
37
 Documentation
1. IIRUP
2. WMR
3. Individual survey report,
certified by the Supply Officer
and Agency Head
4. Cert. list of missing spare parts
5. Stencils of chassis and engine
nos. for motor vehicles
6. Current pictures in 2 positions
38
 Documentation
7. Checklist for Unserviceable
Equipment
This shall indicate the individual
component/part of the equipment
with their condition, whether
serviceable, unserviceable, missing,
etc. The agency could device their
own form most appropriate to the
equipment for appraisal.

39
3 Procedures in Appraisal:
1. Conduct inspection
2. Seek reference price information
3. Compute the appraised value

Inspection
to establish the existence and
condition of the property/asset

to supplement theoretical
computation of value with
first-hand observation
40
Seek Reference Price in Appraisal
Obtain:
Current Market
Acquisition
Value (CMV) of
Cost (AC)
similar property

Replacement Prices from second

Cost for a hand rebuilders
and reconditioners
similar New of machinery, cars
property (RCN) or equipment

Currency
exchange rates
for acquisition
year and
current year 46
Computation of Appraised Value
Take into account the ff:

property’s actual physical condition,

the relevant reference price
information,
expected useful life of the property,
and
changes in the value of the property
due to depreciation, obsolescence,
devaluation of peso or appreciation
in the value of the property from
reconditioning, major repair or
upgrade, etc.
47
 Determination of
Condition Rating of
Property

48
Guidelines in Observing Condition of Property

Very Good (VG), 80-100% - being used to its fully

specified purpose w/o being modified, repaired

Good (G), 55-75% - being used near its fully specified

utilization, with minor repair

Fair (F), 35-50% - below its fully specified utilization,

requires general repair / replacement of minor parts

Poor (P), 15-30% - below its fully specified utilization,

needs extensive repair/replacement of major
components

Scrap (S), 0-10% - unserviceable / cannot be utilized to

any practical degree regardless of modification or
repair 49
• For Furniture and non-mechanized
equipment, which have no major
components, CF = to the condition
rating of the unit itself

Example: If Condition Rating is Very

Good,
the CF is 80 to 100%
• For service vehicle, condition rating is
distributed as follows:

Component %Weight
• Engine 23
• Transmission 7
• Differential 5
• Body / Chassis 35
• Others 30
Total 100%
 Determination
of the
Appraised Value

52
UNSERVICEABLE PROPERTY THAT CAN NO
LONGER BE REPAIRED AND WASTE
MATERIALSAN NO LONGER BE REPAIRED OR
RECONDITIONED

1. Appraised at scrap or junk value

AV = Junk Value
Junk Value = CM price per unit weight (per
canvass) x actual weight of waste materials
Junk Value is based on the prevailing price of
scrap metal or lumber in the local market,
whichever is appropriate.

53
 PROPERTY IS STILL OPERATIONAL,
FUNCTIONAL OR CAN STILL BE REPAIRED

2. Appraised as follows:
– Current Market Value (CMV),
if such is available, or
– Replacement Cost-New (RCN),
if CMV is not available, or
– Acquisition Cost (AC), f CMV
and RCN are both not available.
54
 PROPERTY IS STILL OPERATIONAL,
FUNCTIONAL OR CAN STILL BE REPAIRED

3. Salvage Value of component/part of an

asset found to be serviceable shall be
appraised based on the hierarchy –
CMV, RCN, AC
4. For imported vehicles/mechanized
equipment, each component that has
no available local replacement shall be
treated as junk exclusive of the other
components which are available in the
domestic market. 55
 PROPERTY IS STILL OPERATIONAL,
FUNCTIONAL OR CAN STILL BE REPAIRED

Case 1 - When CMV of a comparable data is available

CF 1

AV = CMV x CF 2
where:
AV - Appraised Value
CMV - Current Market Value
CF1 - Condition Factor of the Property
being appraised
CF2 - Condition Factor of the Advertised/
Canvassed Property
56
 PROPERTY IS STILL OPERATIONAL,
FUNCTIONAL OR CAN STILL BE REPAIRED

Case 2 - When RCN and Estimated Useful Life of the

equipment is available
ERUL
AV = RCN x EUL
where:
RCN - Replacement Cost - New
ERUL - Effective Remaining Useful Life
EUL - Estimated useful Life

57
 PROPERTY IS STILL OPERATIONAL,
FUNCTIONAL OR CAN STILL BE REPAIRED

Case 3 - When RCN is available, Estimated Useful

Life of the equipment is not available

AV = RCN x CF
where:
RCN - Replacement Cost - New
CF - Condition Factor of the property being
appraised

58
 PROPERTY IS STILL OPERATIONAL,
FUNCTIONAL OR CAN STILL BE REPAIRED

Case 4 - When Acquisition Cost is Available

(For Imported Properties)
AV = ( AC x CFF ) x CF
where:
AC - Acquisition Cost
CFF - Currency Fluctuation Factor

P/dollar exchange rate on year of

appraisal
CFF = P/dollar exchange rate on year of
acquisition

CF - Condition Factor of the Property

59
 PROPERTY IS STILL OPERATIONAL,
FUNCTIONAL OR CAN STILL BE REPAIRED

Case 5 - When Acquisition Cost is Available

(For Locally Manufactured Properties)

AV = ( AC x PIF ) x CF
where:
PIF - Price Index Factor
CF - Condition Factor of the Property

Price Index on year of appraisal

PIF =
Price Index on year of acquisition

60
Illustrative Examples
On Appraisal

61
A. When Current Market Value (CMV)
of a comparable data is available
Given: Based from the data contained under the
IIRUP
Property Description:
Mitsubishi L-200 D/Cab Pick-up, Diesel Fed
Model 1995, Silver Gray, Loaded, w/ Stepboard
& Bedliner
Plate No. UFC 963, Engine No. 4D56A-D5940
Chassis No. K14TJUNSL-010751
Acquisition Date: AD = December 16, 1995
Acquisition Cost: AC = P495,000.00

Date of Appraisal: June 26, 2000

62
ANNEX C1

CHECKLIST FOR UNSERVICEABLE EQUIPMENT:

VEHICLES/HEAVY EQUIPMENT
Equipment Description/Type Mitsubishi L-200 Prop.No. Plate No. UFC - 963
Unit Serial No. K14TJUNSL-010751 Engine Serial No. 4D56-D5940
Acquisition Cost P 495,000.00 Date December 16, 1995
Date Reported as Unserviceable _____________________________________

LEGEND:
S= Serviceable X = Unserviceable
M= Missing NA = Not Applicable

ENGINE: SUSPENSIONS:

Operating Condition S FrontSpringAssembly S

Injection Pump Assembly S RearSpringAssembly S
Injection/Nozzle Assy. S
Fuel Pump Assembly S WHEELS:
Cylinder Head Assembly S
Water Pump Assembly S Tires Front S
Radiator Assembly S Tires Rear S
Air Cleaner Assembly S Spare Tire S
Carburetor Assembly NA
Governor Assembly NA PROPELLER SHAFT ASSY.:
Turbo Charger NA
Oil Cooler Assembly NA Front NA
No. of Cylinders 4 Rear S

ELECTRICAL DIFFERENTIAL ASSY.:

Generator/Alterator Front NA
Assembly S Rear S
Starter Assembly S
Voltage Regulator Assy. S FINAL DRIVE
Solenoid Assembly NA
Ignition Coil Assy. NA Sprocket Assembly NA
Magneto NA Drive Chain NA
Distributor Assembly
2/cap , rotor NA UNDERCARRIAGES:
Wiper Assembly S
Headlight Assembly S Track Link Assembly NA
Stop & Tail Light Assy. S Idler Assembly NA 63
Directional Light Assy. Track Adjuster Assy. NA
(front & rear) S Track Roller Assy. NA
Battery S Carrier Roller Assy. NA
CLUTCH ASSEMBLY S TORQUE CONVERTER NA
CUSHIONS: BODY/CAB/FENDERS S
Front Seat S
Rear Seat S WINDSHIELD (Front) S
Operator’s Seat S FUEL TANK ASSEMBLY NA
GAUGES: HYDRAULIC SYSTEM:
Hour/Service Meter NA Hydraulic Pump Assembly NA
Speedometer S Hydraulic Motor Assembly NA
Tachometer NA Hydraulic Hoses NA
Temperature Gauges Control Valve Assembly NA
(water) S Hydraulic Cylinders NA
Oil Pressure Gauges S
Converter oil Temperature TRANSMISSION ASSEMBLY S
Gauges NA
TRANSFERCASE ASSEMBLY NA
BRAKE SYSTEM: WINDSHIELD (rear) S
Master Cylinder Assembly S FUEL TANK ASSEMBLY S

STEERING SYSTEM:
Power Steering System S
Steering Clutch Assembly with Disc Plate & Brake Lining S

ACCESSORIES:
Dozer/Blade Assembly NA Riper Assembly NA
Cutting Edges NA End Bits NA
Dragline Bucket NA Clamshell Bucket NA
Backhoe Bucket NA Ditching Bucket NA
Fairlead assembly Tagline Assembly
(for crane) NA (for crane) NA
Compressor NA Cables NA
Boom Assembly NA Boom Pulley NA 64
Lifting Block NA Others NA
REMARKS:
Fuel Injection Assy - for minor overhaul
Left Rear Side & Rear Bumper - with dents and scratches
Body of unit needs paint wash-over
Odometer Reading = 69,000
kms

Inspected
by:

JUAN DELA CRUZ

(NAME)

Sr. TAS

(DESIGNATION)

65
ANNEX C2

CHECKLIST FOR UNSERVICEABLE EQUIPMENT:

VEHICLES/HEAVY EQUIPMENT
Equipment Description/Type L-200 1995 Model Prop.No. Plate No. UDR - 680
Unit Serial No. K14TYPSDE-839716 Engine Serial No.4D56-D6785
Acquisition Cost P 495,000.00 Date October 19, 1995
Date Reported as Unserviceable __Comparable Property_____

LEGEND:
S= Serviceable X = Unserviceable
M= Missing NA = Not Applicable

ENGINE: SUSPENSIONS:

Operating Condition S FrontSpringAssembly S

Injection Pump Assembly S RearSpringAssembly S
Injection/Nozzle Assy. S
Fuel Pump Assembly S WHEELS:
Cylinder Head Assembly S
Water Pump Assembly S Tires Front S
Radiator Assembly S Tires Rear S
Air Cleaner Assembly S Spare Tire S
Carburetor Assembly NA
Governor Assembly NA PROPELLER SHAFT ASSY.:
Turbo Charger NA
Oil Cooler Assembly NA Front NA
No. of Cylinders 4 Rear S

ELECTRICAL DIFFERENTIAL ASSY.:

Generator/Alterator Front NA
Assembly S Rear S
Starter Assembly S
Voltage Regulator Assy. S FINAL DRIVE
Solenoid Assembly NA
Ignition Coil Assy. NA Sprocket Assembly NA 66
Magneto NA Drive Chain NA
Distributor Assembly
2/cap , rotor NA UNDERCARRIAGES:
Wiper Assembly S
Headlight Assembly S Track Link Assembly NA
Stop & Tail Light Assy. S Idler Assembly NA
Directional Light Assy. Track Adjuster Assy. NA
(front & rear) S Track Roller Assy. NA
Battery S Carrier Roller Assy. NA
CLUTCH ASSEMBLY S TORQUE CONVERTER NA
CUSHIONS: BODY/CAB/FENDERS S
Front Seat S
Rear Seat S WINDSHIELD (Front) S
Operator’s Seat S FUEL TANK ASSEMBLY NA
GAUGES: HYDRAULIC SYSTEM:
Hour/Service Meter NA Hydraulic Pump Assembly NA
Speedometer S Hydraulic Motor Assembly NA
Tachometer NA Hydraulic Hoses NA
Temperature Gauges Control Valve Assembly NA
(water) S Hydraulic Cylinders NA
Oil Pressure Gauges S
Converter oil Temperature TRANSMISSION ASSEMBLY S
Gauges NA
TRANSFERCASE ASSEMBLY S
BRAKE SYSTEM: WINDSHIELD (rear) S
Master Cylinder Assembly S FUEL TANK ASSEMBLY S
STEERING SYSTEM:
Power Steering System S
Steering Clutch Assembly with Disc Plate & Brake Lining S
ACCESSORIES:
Dozer/Blade Assembly NA Riper Assembly NA
Cutting Edges NA End Bits NA
Dragline Bucket NA Clamshell Bucket NA
Backhoe Bucket NA Ditching Bucket NA
Fairlead assembly Tagline Assembly
(for crane) NA (for crane) NA
Compressor NA Cables NA
Boom Assembly NA Boom Pulley NA 67
Lifting Block NA Others NA
REMARKS:
Engine needs top-overhauling
Signal lights and Headlight Assy. - not original/Taiwan
Needs underchassis repair - brake system & Suspension Assy.

Odometer Reading = 97,500 kms.

Inspected by:

JUAN DELA CRUZ

(NAME)

Sr. TAS

(DESIGNATION)

68
A.1 Solution:
CF1
AV = CMV x
CF2

CMV = P209,000.00

Advertised Prices (similar brand and year model from Used

Car Dealers):

a) P209,000.00 – lowest used for conservatism

b) P260,000.00

c) P285,000.00

CF1 = Condition Factor of subject property

CF2 = Condition Factor of comparable property

69
 CF1 (see attached check list of subject property, Annex
C1)

Component %Weight CF

Engine 23 0.80 = 0.1840

Transmission 7 0.90 = 0.0630
Differential 5 0.90 = 0.0450
Body / Chassis 35 0.75 = 0.2625
Others 30 0.75 = 0.2250
CF1 Total: 0.7795

CF2 (see attached check list of subject property, Annex

C2)

Component %Weight CF

Engine 23 0.60 = 0.1380

Transmission 7 0.85 = 0.0595
Differential 5 0.85 = 0.0425
Body / Chassis 35 0.70 = 0.2450
Others 30 0.40 = 0.1200
CF2 Total: 0.6050 70
Thus:

0.7795
AV = (P209,000.00)
0.6050

AV = P269,282.00

71
 Annex A

INVENTORY AND INSPECTION REPORT OF UNSERVICEABLE PROPERTY

As of ___________________
Fund: _________________________________________________

INVENTORY INSPECTION

Date Accumulated Net Book

Particulars Property No. Quantity Unit Cost Total Cost Remarks Appraised Value Disposition Remarks
Acquired Depreciation Value
Mitsubishi L-200 F-1301-AA01 1 unit 495,000 00 495,000 00 318,214 00 176,786 00 serviceable but no 269,282 00 for disposal thru public
Plate No. UFC - 963 longer needed auction
Engine No. 4D56A-
D5940
Chassis No.
K14TJUNSL-010751

I CERTIFY that I have inspected each I CERTIFY that I have

CERTIFIED CORRECT BY: VERIFIED BY: and every article enumerated in this witnessed the inspection of
report the articles enumerated in
this report

Name and Signature Name/Signature-Head of the Accounting Unit Name and Signature of Inspector

Position and Designation Position and Designation Position and Desigantion Name and Signature of Witness

Date Date Date Date

APPROVED BY:

Authorized Official Date

page 1/2

72
B. When Replacement Cost New
(RCN) is available
1. When the Estimated Useful Life (EUL) of the
property is available

Given: Same vehicle used in the above CMV

method

The cost of brand new engines for the

vehicle available in the market is
P100,000.00/unit.

Solve: RCN of the vehicle under appraisal

73
Component % Weight
Engine 23 1 = P 100,000.00
0.07 (P100,000.00)
Transmission 7 = = 30,435.00
.23
0.05 (P100,000.00)
Differential 5 = = 21,739.00
. 23
0.35 (P100,000.00)
Body/ Chassis 35 = = 152,174.00
.23
0.30 (P100,000.00)
Others 30 = = 130,435.00
. 23
Total: P 434,783.00
say: P 435,000.00
Add Cost of Assembly, OCM: 65,000.00
74
RCN = P 500,000.00
Note: If there are available price data in the market for
the other components, use the market data of said
components rather than the ratio and proportion
applied above.

Given: EUL = 7 yrs ; cost assembly P65,000.00,

Component %Weight ERUL EUL

Engine 23 x 6 / 7 = 0.1971
Transmission 7 6 7 = 0.0600
Differential 5 6 7 = 0.0430
Body / Chassis 35 5 7 = 0.2500
Others 30 5 7 = 0.2140

0.7641
AV = RCN x ERUL/EUL

AV = (P500,000.00) ( 0.7641)

AV = P382,050.00
75
 B. When Replacement Cost New
(RCN) is available
2. When the Estimated Useful Life (EUL) of the property
is not available

Given: Same vehicle/property used in the above CMV

method
AV = RCN x CF

where:
RCN = P500,000.00 (from B.1)

CF = 0.7795 (from CMV Method above)

AV = P500,000.00 x 0.7795

AV = P389,750.00
76
C. When Acquisition Cost (AC) is
available
For imported properties: Acquisition Cost Method
AV = AC x CFF x CF
where:
CFF = Currency Fluctuation Factor

P/$ exchange rate on year of appraisal

=
P/$ exchange rate on year of acquisition
40
=
25.7144

CFF = 1.56

CF = 0.7795

AV = (P495,000.00) (1.56) (0.7795)

AV = P601,930.00 77
D. Other Cases

78
 D. Other Cases
1. When the property/subject vehicle is
lost for which accountability is being
assessed:
CF1
AV = CMV x
CF2

1
AV = P209,000.00 x
0.6050

where : CF1 = 1 (condition factor when subject

property is lost under sec. 4.1.3)

AV = P345,455.00
79
 D. Other Cases
2. When the component, such as engine unit, of
the above vehicle under appraisal is
missing/salvaged:

0.7795 – 0.1840
AV = (P209,000.00)
0.6050

0.5955
= (P209,000.00)
0.6050

AV = P205,719.00
where:
0.1840 = over-all CF of the engine unit of the subject
vehicle (obtained earlier)
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 D. Other Cases
3. When engine unit is beyond economic repair and is
considered junk/scrap:

CF1 – 0.1840
AV = CMV x + junk value of the
CF2 engine unit

where:

junk value = Estimated weight scrap/junk value

engine unit of Engine of metal as canvassed

= 500 kilos (P5.00)

junk value
= P2,500.00
engine unit

where:
P5.00 = prevailing market value of metal
81
 0.5955
AV = (P209,000.00) + P2,500.00
0.6050

= P205,719.00 + P2,500.00

AV = P208,219.00

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 Adjustment
Adjustment of AVof AV
When
When auction
auction bids bids are low
are low

Determineif ifdifference
Determine difference
IsIsexcessive
excessive

Yes No
Call another
Difference
bid/reduce Difference Continue
FP by 10% excessive
excessive
Sale

Yes No
Difference
excessive

Negotiate with
highest offeror
Adjustment of Appraised Value when Bids are low:

Given: Agency: Commission On Audit

Item for Disposal: Toyota Corolla 2002 Model
Appraised Value: Floor Price = P 100,000.00
I. First Public Bidding Conducted  Failure
• Adjust the Floor Price by 10%  P90,000.00
II. Second Public Bidding  Failure
III. Negotiate
Highest Offeror  P 68,000.00
IV. Determine the Extraneous Factors
a) Cost of conducting another Public Auction - P5,000.00
b) Cost of Security/Janitorial P2,500.00/mo. 5,000.00/mo.
c) Cost of space rental P 2,500.00
V. Compute the Extraneous Factors:
1st month P 10,000.00 Therefore, In the 2nd month, the agency
2nd month P 5,000.00 will incur an additional expense of
P 15,000.00 P 15,000.00 for retaining the vehicle
Then, P 90,000.00 – P 15,000.00 = P 75,000.00
% Difference = P 75,000.00 – P 68,000.00 x 100% = 9.3%
P 75,000.00
VI. Justifications for seeking approval of negotiated sale:
1)There were two (2) failed public biddings conducted.
2) Conduct Cost Benefit Analysis by citing the above extraneous factors.
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Thank you for your
attention &
HAVE A GOOD
DAY!

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