Property

Inspection
 Learning Objectives
At the end of the session
the participants:

 name the procedures in

property inspection

 name the important

documents to support
the purchase of
the needed items
Presidential Decree 1445 or the Government
Auditing Code of the Philippines
Section 44 – Check and Audit of Property or
Supplies
• The auditor shall from time to time conduct a
careful and thorough check and audit of all
property or supplies of the agency to which he is
assigned. Such check and audit shall not be
confined to a mere inspection and examination of
the pertinent vouchers, inventories, and other
papers but shall include an ocular verification of
the existence and condition of the property or
supplies. The recommendation of the auditor shall
be embodied in the proper report.
 Property Inspection Defined
 Inspection means the
 is an auditing technique examination (including testing)
which aids the Auditor in of supplies and services
his audit. (including raw materials, and
component) to determine
whether the supplies and
services conform to contract
requirements, which include
all applicable drawings,
specifications and purchase
description.

 Inspection may consist of check

for identity, quantity and
shipping damages.

(Source: Training Handbook on Property & Supply

Management System)
 RULES ON INSPECTION OF PURCHASES
(Sec. 465, COA Cir. 91-368)
• Purchases made by the agency must be inspected and
verified by their authorized inspector for conformity with
specifications in the order. However, the Chief of the
Inspection Service or Section, may waive the inspection
of purchases of insignificant value, provided he is fully
convinced that the delivery in question is in accordance
with the specifications of the order. The waiver of the
inspection must be stamped on the original copies of the
order and invoice.

• Evidence of inspection of deliveries of insignificant value

for supplies and materials, must be shown by notation on
the original copies of the order and invoice, thus:
Inspected by:

(Signature)
-----------------------
(Printed Name)
Date _______________
Sec. 114, COA Cir. 92-386;
Sec. 465, GAAM, Vol. 1
 RULES ON INSPECTION OF PURCHASES

• All items to be inspected shall invariably be accepted

first by the requisitioning or property officer;

• Report of inspection of all consumables shall be

submitted to the COA Auditors within 24 hours
(COA Cir. 89-299A).
 General Guidelines and Procedures
in Conducting Inspection

1. Inspection shall be conducted only on deliveries properly

receipted for, accepted and/or paid by the agency;
2. Inspection shall be conducted based on a duly approved
Purchase Order (PO)/Letter Order (LO)/Contract/Job
Order, or their equivalents;
3. The inspector shall check for completeness and
authenticity of the following documents:
• PO/LO/Contract of other equivalent – determine
completeness as to date, number, name and address of
supplier, supplier’s acknowledgment of order including
date of receipt, nature and place of delivery,
quantity, complete specifications of the item/s, unit
price, and approval of the head of the agency or his
authorized representative.
 General Guidelines and Procedures
in Conducting Inspection

• Take note of any alterations, erasures or other

modifications made which must be verified and
duly authenticated by authorized approving
official(s).
• Supplier’s Invoice/Delivery Receipt –
• Check all data contained therein. It should be
pre-numbered and not just typed, stamped or
written separately;
• Note all data contained therein. It should
conform with those in the order/contract; and
• Note the “RECEIVED” portion. Receipt and
date of receipt of item/s delivered should be duly
acknowledged by the Property Officer.
 General Procedures in
Conducting Inspection
 Agency Certificate of Acceptance
 Performance/Quality Test Result, if applicable
 Detailed Cost Breakdown
 Brochures/Manuals/Supplier’s Catalogue, if
applicable
 All other documents specified in the contract
necessary for the determination of conformance
with specifications.
4. It shall be conducted at all times in the presence of
the authorized agency personnel and if necessary,
with the Supplier’s representative. All personnel
present at the time of inspection shall be requested to
sign in the Inspection Report.
 General Procedures in
Conducting Inspection
5. Inspection Report shall be submitted within 2 WDs
from the date the inspection is completed;
6. In cases of modifications in the order or substitutions
in deliveries, duly signed addendum/amendment to
the contract shall be required as basis for the
inspection;
7. Inspection shall be made, as a general rule, in the
site specified in the order. Under no circumstances
shall inspection be conducted in the premises of the
supplier, except in the ff. transactions, and with
written approval from the proper authorities
concerned:
 General Procedures in
Conducting Inspection
 where determination of conformance with order at
any other point would require uneconomical
disassembly or destructive testing;
 where considerable loss would result from the
manufacture and shipment of
unacceptable/defective/substandard items or from
the delay in making the necessary corrections or
replacements;
 where special instruments or measuring devises
required for inspection are available only at source;
 where otherwise determined to be in the best
interest of the government.
 General Procedures in
Conducting Inspection
5. For purposes of determining quantity of bulk
deliveries and for taking representative samples for
test, the sampling technique may be applied.

Sampling is the process of obtaining information

about a group of data having similar purpose or
function, usually ten (10) percent of it.

Sampling Techniques:
1. Random Sampling – when items included in the
sample are completely taken at random from the
entire delivery or from the selected group within it.
 General Procedures in
Conducting Inspection
2. Interval Sampling – when items in the delivery do
not have a serial number, post number or some other
form of item identification, ready identification is not
possible and random sampling proves difficult to use.
In using this technique, items in the group are not
positioned in such a manner as to bias the results,
that none of the items as part of the delivery had
been moved so that the first item is selected at
random.

9. When by actual count or upon sampling, the trend

shows shortage by volume, weight, etc., the
corresponding shortage shall be replaced/deducted
from the amount to be allowed in post-audit.
 General Procedures in
Conducting Inspection
The amount deductible in audit in case of reduction
shall be computed by multiplying the shortage in
quantity by its unit cost. The unit cost is determined
by dividing the total cost by the total quantity.

10. For deliveries subject to test, samples taken from the

deliveries shall be submitted to the designated
testing centers with the Request for Analysis, duly
accomplished.

11. Sign the Inspection Report and indicate the date.

 Acceptance and Rejection of
Deliveries (Sec. 482, GAAM Volume 1)
a. Supplies and materials tested and found
to be in accordance with existing
specifications may be accepted and paid
in full.
b. Supplies and materials whose quality
analysis shows a deficiency of less than
10% may be accepted, provided they will
serve the purpose for which they were
purchased, the defect is minor and the
contract price is reduced according to the
deficiency found.
 Acceptance or Rejection of
Deliveries
c. Supplies and materials whose analysis
shows a deficiency of 10% and over must be
totally rejected and replacement thereof
must be demanded.

d. Supplies or property whose quantity is short

by volume, weight, actual count, etc., shall
be subject to reduction on contract price at
an amount equivalent to the shortage,
provided said deliveries are acceptable to
the agency or unit.
 WAIVER OF TEST (Sec. 483, GAAM
Volume 1)

a. When the specifications of the order do not need

actual testing because they can be determined or
calculated;
b. When the specifications of the lot or item under
current order are the same as of those previously
tested in designated testing centers provided the
supplier of the lot under current order is the same
supplier of the previous delivery/order. The previous
laboratory report shall be valid for 6 months from
date of test.
 WAIVER OF TEST
c. Products of government owned or controlled
corporations, schools and other government
institutions in their original containers, sealed and
properly labeled.
 Other Important Matter

In view of the total lifting of pre-audit

(COA Circular No. 95-006 dated 18 May 1995),
inspection by COA is no longer a prerequisite
neither for acceptance nor for payment.
 Authorized Laboratories for
Testing and Evaluation
1. Research and Development Center, (AFP)
• Ordinance and Chemicals
• Quartermaster
• Special projects
2. Bureau of Food and Drug (BFaD)
• Food
• Drugs and Medicines
• Cosmetics
 Authorized Laboratories for
Testing and Evaluation
3. Bureau of Research and Standards (DPWH)
• Construction Materials
4. Industrial Technology Development
Institute (ITDI)
• Office Supplies
• Industrial Products
5. Metals Industry Research and Development
Center (MIRDC)
* Metal Products
 Authorized Laboratories for
Testing and Evaluation
6. Bureau of Soils and Water Management
(BSWM)
* Fertilizers
7. Bureau of Animal Industry
• Animal Feeds
• Veterinary Products
8. Forest Management Bureau (FMB) of the
DENR
* Wood and Wood Products
9. Philippine Textile Research Institute (PTRI)
* Textile
 Documentary Requirement for Inspection as
Prescribed under COA Memo 91-704

1. Inspection of Deliveries/ Fabrication/ Installation

• Approved Contract/PO/LO
• Invoice/Delivery Receipt/Billing Document and
Official Receipt
• Certificate of Acceptance
• Performance/Quality Test Result, if applicable
• Detailed Cost Breakdown
• Brochures/Manual/Supplier’s Catalogue (if
applicable)
• Other document/s specified in the contract
necessary to determine conformance with
specifications
Documentary Requirement for Inspection as
Prescribed under COA Memo 91-704
2. Inspection for Infrastructure Projects - For Reported
Progress Accomplishment
• Approved Accomplishment Report
• Certificate of Completion and Acceptance (100%
accomplishment)
• Perfected (approved) Original Contract and all
Approved Variation Orders
• Approved Plans and Specifications (original and
all approved variation orders)
• Authorized (approved) Breakdown of the Contract
Cost (original) and all variation orders involved in
the reported accomplishment
• As-Built Plans (for completed projects only)
Documentary Requirement for Inspection as
Prescribed under COA Memo 91-704
2. Inspection for Infrastructure Projects -For Necessity of
Variation Orders
• Approved Variation Order subject of inspection/
verification
• Original contract
• Approved original plans and specifications and/or
latest approved revised plans prior to the subject
variation order
• Authorized breakdown of the original contract cost
• Approved revised plans and specifications for the
variation order
• Project Engineers’ Report showing the dates of
inspections and the results thereof, to support the
necessity of the issuance of the variation order.
Documentary Requirement for Inspection as
Prescribed under COA Memo 91-704

3. Post-Repair Inspection of Facilities, Heavy Equipment, Aircraft

and Marine Vessels
• Approved Contract/Job Order/Purchase Order and its
integral parts including all approved variation orders
issued
• Certificate of Completion and Acceptance
• Accomplishment Report signed by Management/Agency
concerned
• Approved original and revised (if there are variation order
issued), installation plans/lay-out for the repair of
building/equipment/facilities
• Complete technical description of equipment/aircraft/vessel
• Duly accomplished report of waster materials, certificate of
sea travel/seaworthiness for marine vessel, and certificate
of airworthiness for aircraft
Documentary Requirement for Inspection as
Prescribed under COA Memo 91-704

4. Post-Repair Inspection of Vehicles, all Equipment except Heavy

Equipment
• Approved Job Order/Work Order/Contract
• Agency Certificate of Acceptance
• Waste Materials Report, if applicable
Records of Inspections (Sec. 467,
GAAM, Vol. 1)

All documents relating to the

inspection and approval of
supplies, materials and
equipment received from
suppliers, will be collected
together for the transaction to
which they relate, and they
will be attached to and
become an integral part of the
vouchers prepared for
payment.
Records of Inspections (Sec. 467,
GAAM, Vol. 1)

 No voucher may be paid until

the evidence of satisfactory
inspection by the Agency has
been attached to that
voucher. Representatives of
the Chairman, COA shall
conduct surprise selective
inspection of deliveries soon
after their acceptance by the
agencies.