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    3-Disposal & Divestment

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    Louie Ocampo Macni
    This document provides information about the disposal of government property. It discusses the objectives of disposal, which include avoiding ongoing costs, preventing further deterioration of assets, and making space available. Modes of disposal include sale, destruction/condemnation, transfer, barter, and donation. Sale is generally done through public auction, while destruction is for property that is hazardous, valueless, or beyond repair. The roles and responsibilities of disposal committees in the process are also outlined.

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    © All Rights Reserved
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    3-Disposal & Divestment

    Uploaded by

    Louie Ocampo Macni
    144 views42 pages
    This document provides information about the disposal of government property. It discusses the objectives of disposal, which include avoiding ongoing costs, preventing further deterioration of assets, and making space available. Modes of disposal include sale, destruction/condemnation, transfer, barter, and donation. Sale is generally done through public auction, while destruction is for property that is hazardous, valueless, or beyond repair. The roles and responsibilities of disposal committees in the process are also outlined.

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    disposal and divestment of properties

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    This document provides information about the disposal of government property. It discusses the objectives of disposal, which include avoiding ongoing costs, preventing further deterioration of assets, and making space available. Modes of disposal include sale, destruction/condemnation, transfer, barter, and donation. Sale is generally done through public auction, while destruction is for property that is hazardous, valueless, or beyond repair. The roles and responsibilities of disposal committees in the process are also outlined.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    144 views42 pages

    3-Disposal & Divestment

    Uploaded by

    Louie Ocampo Macni
    This document provides information about the disposal of government property. It discusses the objectives of disposal, which include avoiding ongoing costs, preventing further deterioration of assets, and making space available. Modes of disposal include sale, destruction/condemnation, transfer, barter, and donation. Sale is generally done through public auction, while destruction is for property that is hazardous, valueless, or beyond repair. The roles and responsibilities of disposal committees in the process are also outlined.

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    © All Rights Reserved
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    Learning Objectives

    At the end of the session, the


    participants are expected to be able
    to:
    Identify the assets that should be
    disposed;
    Enumerate the modes of disposal;
    Specify the general procedures to be
    followed and the documents required
    in disposing government property.

    DISPOSAL in government refers to:


    The sale or destruction of:
    Unserviceable property no longer
    needed by the government agency
    Property confiscated/forfeited by law
    enforcement agencies
    Records which are already
    unnecessary and
    valueless.

    Disposal includes the:


    Privatization/divestment of
    government assets owned by
    government-Owned or
    controlled Corporation (GOCCs)
    and Government Financial
    Institutions (GFIs)

    Authority and Responsibility for


    Divestment or Disposal is lodged
    in the agency head or governing
    bodies who shall constitute the
    appropriate committee to
    undertake the disposal.
    EO No. 888
    COA Cir. 89-296
    COA Memo 92-751
    COA Cir. 95-006

    COA Circular 95-006


    Section 5.0
    Pre-audit Activities Lifted:
    Witnessing of condemnation/
    destruction and approval of price
    of unserviceable government
    property and other disposable
    assets
    Inspection of unserviceable and
    disposable property

    COA Circular 95-006


    Section 6.10
    Management shall furnish the
    COA Auditor with a copy of the
    schedule or notice of opening
    of bids or condemnation/
    destruction of government
    property and other disposable
    assets at least five days before
    the scheduled time.

    Objectives of Disposal
    to avoid continuing carrying/inventory costs;
    to prevent further deterioration of assets
    subject of disposal thereby obtaining fair return
    in case of sale;
    to relieve accountable officers of unnecessary
    accountability;
    to make available space for the agency

    Determination of Disposable Property


    Unserviceable or can no longer be repaired
    or reconditioned
    Maintenance/repair costs more than
    outweighs the benefits and services
    Has become obsolete or outmoded
    Has been rendered unnecessary due to
    change in the Agencys functions/mandate
    In excess of requirements
    Has become dangerous or hazardous to use

    Property/Assets Subject to
    Disposal
    1. Unserviceable property
    2. Confiscated/Seized property
    3. Property under
    distraint/levy/garnishment
    4. Unclaimed motor vehicles (PD1911)
    5. Real property
    6. Valueless records/documents

    Determining Factors in the


    Disposed of Unserviceable
    Property
    Serviceable property that has been
    rendered unnecessary;
    Unused supplies, and spare parts that
    were procured in excess of requirements;
    and
    Unused supplies and materials that has
    become dangerous to use because of
    long storage or use of which is
    determined to be hazardous.

    UNSERVICEABLE
    PROPERTY:
    Refer to property, supplies, materials
    and equipment owned by the
    government that are no longer capable
    of providing economic benefits/service
    potential to the agency
    That which is beyond repair and has no
    more utilization potential.
    potential

    Beyond economic repair:


    When cost of repair/maintenance
    becomes prohibitive/disadvantageous
    to the government considering such
    factors as:
    Maintenance expenses
    Downtime/ Frequency of breakdown
    Replacement cost of spare parts
    Alternative modes such as rental of
    equipment or outright replacement

    Obsolete Property
    That which has lost its efficacy
    either due to technological
    advancement, change of
    procedures, reorganization of
    office, or completion of
    project.

    CONFISCATED/SEIZED PROPERTY:
    Refer to property which came into the
    ownership and possession of the
    government as a result of its
    implementation and enforcement of
    laws and regulations on the protection
    of forest lands, smuggling or failure to
    pay customs duties, confiscation of
    prohibited drugs and contrabands and
    other similar prohibited/regulated
    operations.

    VALUELESS
    RECORDS/DOCUMENTS:
    Include all record materials
    that have reached their
    prescribed retention periods
    and usefulness to agency or
    the government as whole.

    VALUELESS
    RECORDS/DOCUMENTS:
    Exclude library and museum
    materials, documents
    submitted for copyright,
    models, copies of documents
    preserved for reference, and
    stocks of publications and
    processed documents.

    Guidelines on the Divestment or Disposal


    of Assets (COA Circular 86-264)
    1. Constitute the Disposal Committee
    - require the submission the 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

    2. Furnish the COA Auditor at least five days


    before the scheduled bidding with a copy of
    program for disposal, IIRUP/RMW, appraisal
    documents & disposal procedures

    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. Constitute the BAC on Disposal
    to conduct the public auction.
    5. Pre-qualify bidders -10% bond,
    latest FS, ITR.

    Creation of Disposal Committees


    and Secretariat (EO 309)
    For National and
    Corporate Agencies

    Chairman -- not lower than Assistant Secretary for


    a department and Assistant Director for a bureau.
    Members
    Head of Administrative Unit;
    Head of Property Unit

    P.D.1445 (Govt Auditing Code of the


    Phil)
    Section 79. Destruction or sale of
    unserviceable property. When government
    property has become unserviceable for any
    cause, or 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 in the presence of the
    auditor concerned and, if found to be
    valueless or cannot be sold, it may be
    destroyed in their presence.

    P.D.1445 (Govt Auditing Code of


    the Phil)

    Section 79. Destruction or sale of


    unserviceable property. (cont)
    If found to be valuable, it may be
    sold at public auction to the highest
    bidder under the supervision of the
    proper committee on award or similar
    body in the presence of the auditor
    concerned or other duly authorized
    representative of the COA, after
    advertising by printed notice in the
    Official Gazette, or for not less than three
    consecutive days in any newspaper of
    general circulation,

    Section 79, P.D.1445 (Cont.)


    Section 79. Destruction or sale of
    unserviceable property. (cont)
    When the value of the property does
    not warrant the expense of publication,
    by notice posted for a like period in at
    least three public places in the locality
    where the property is to be sold. In the
    event that the public auction fails, the
    property may be sold at a private sale at
    such price as may be fixed by the same
    committee or body concerned and
    approved by the Commission.

    Duties of the Disposal


    Committee
    Inspect/authorize the Departments/
    Agencys field offices to inspect the
    unserviceable property and verify
    justification for disposal;
    Set the final appraised value of all
    disposable property considering
    obsolescence, market demand,
    physical condition and results of
    previous bidding/auction for similar
    property;

    Duties of Disposal
    Committee
    (Cont)

    Recommend to the head of agency


    for approval, the manner of
    disposal taking into account
    pertinent pro- visions of Revised
    Adm. Code and Govt. Auditing
    Code;
    Conduct the public auction; and
    Recommend corresponding award.

    Modes of Disposal
    1. Sale
    - Public auction/bidding
    - Negotiated sale
    2. Condemnation/
    Destruction
    3. Transfer
    4. Barter
    5. Donation

    1. Sale - Public
    Auction
    As general rule, the disposal of government
    property shall be through sale by public auction
    which may be done through sealed public bidding
    or when circumstances warrant, by viva voce:
    a) adequate publicity and notification to attract
    greatest number of interested parties (PD 1445)
    b) provide sufficient time between publication
    and
    opening of bids;
    c) give interested parties opportunity to inspect
    the
    property
    d) confidentiality of sealed proposals
    e) bond and prequalification requirements to
    guarantee
    performance
    f) fair evaluation of tenders and proper
    notification of
    award

    Sale thru Negotiation


    There was failure of public auction:
    a) when there is only one offer (Shall not be opened)
    b) when the offers/tenders are non-complying
    (when the technical, legal and financial
    requirements or pre-qualification are not met)
    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.

    2. DESTRUCTION OR
    CONDEMNATION:
    Shall be resorted to only under
    any of the following instances:

    When the unserviceable property


    - has no commercial value,
    - cannot be sold (no buyers),
    - is hazardous, or
    - is beyond economic repair;

    Destruction or Sale of
    Unserviceable Property
    has become unserviceable
    for any cause
    is no longer needed
    Sec. 79 of PD 1445

    Destruction (Cont)
    When there is no willing
    receiver; or
    c. When the appraised value is
    less than the administrative
    cost of sale.
    b.

    Valueless property shall


    be condemned either by:
    Burning
    Pounding
    Breaking
    Shredding
    Throwing beyond recovery
    Destruction shall be made in the
    presence of the disposal Committee.

    3. Transfer
    Upon the initiative of the
    owning agency or upon
    submission of request to the
    owning agency, property
    recommended for disposal may
    be transferred to another
    government agency.

    4. BARTER:
    Is a modified form of Transfer
    wherein an agency transfers
    property to another government
    agency in exchange for another
    piece of property. The value of
    the property being transferred
    may or may not be equivalent
    to that being received.

    Barter (Cont)
    Shall be resorted to where
    there is an offer that would
    redound to the interest of and
    is advantageous to the
    government

    5. Donation
    May be made to
    charitable, scientific,
    educational or cultural
    institutions.
    institutions

    Policies on Derecognition of PPE


    (PPSAS)
    Cost of PPE, Accumulated Depreciation and

    Accumulated Impairment Loss shall be dropped from


    the books upon disposal or determination that no future
    economic benefits or service potential is expected;

    Gain or loss arising from derecognition shall be


    included in Surplus or Deficit;
    When only a part of a PPE is replaced, the carrying
    amount of the replaced part shall be derecognized; if it
    is not practicable to determine the carrying amount of
    the replaced part, the entity may use the cost of the
    replacement as an indicator of the cost of the replaced
    part at the time it was acquired/constructed;
    A JEV shall be prepared to derecognize PPE only after
    its disposal (Sec.39-GAM)

    Policies on Derecognition of PPE


    (PPSAS)
    Disposal procedures shall be in accordance with the
    applicable provisions on Supply and Property
    Management and Sec. 79, P.D. 1445.

    The cost of fully depreciated PPE and related


    accumulated depreciation/ impairment loss shall not be
    removed from the accounts;
    Temporary idle activity/abandonment of PPE does not
    preclude depreciation thereof;
    PPE is said to be unserviceable if it is no longer
    capable of providing economic benefits/service
    potential to the agency, thus it shall be reported in the
    IIRUP;
    PPE reported in the IIRUP shall be dropped from the
    books thru a debit to Impairment Losses PPE at its
    carrying value (PPE less Accumulated Depreciation)

    Exercise: Match col. A with B

    Column A

    1) Equipment needing excessive cost of


    maintenance due to frequent downtimes
    and few available parts

    Col. B
    a) unserviceable
    property

    2) Approves disposal of
    government property

    b) Disposal
    Committee

    3) Resorted to due to failure of public


    bidding/auction
    4) Property no longer capable of
    providing economic benefits
    5) Mode of transfer to private entity

    c) Donation

    6) Materials that reached prescribed


    retention period
    7) Conducts public auction/bidding to
    determine the sale price most
    advantageous to government
    8) He is furnished copy of schedule of
    public auction

    d) Head of agency
    e) Obsolete
    property
    f) negotiated sale
    g) Beyond
    economic repair
    h) Destruction of
    PPE

    40

    Learning Objectives
    At the end of the session, the
    participants are expected to be able to:
    Identify the assets that should be
    disposed;
    Enumerate the modes of disposal;
    Understand the general procedures to
    be followed and the documents
    required in disposing government
    property.

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