DISPOSAL AND APPRAISAL

Learning Objectives:
1. State the applicable provisions of
laws, rules and regulations on
appraisal and disposal.
2. Understand the procedures on
appraisal and disposal.

3. Identify the documents to support

appraisal and disposal activities.
 DISPOSAL /
DISPOSITION
- the end of the life
cycle of a
government
property
Authority and Responsibility
for Divestment or Disposal
is lodged in the agency
head or governing bodies.

COA Cir. 89-296;

EO No. 888
Sec. 40 GAM
 Destruction or Sale of
Unserviceable Property
 has become unserviceable
for any cause
 is no longer needed

Sec. 79 of PD 1445
GAAM 502
COA Circular 95-006
Section 9.06

A copy of the Inspection Report of

unserviceable property and equipment shall
be submitted to the Head of the Auditing
Unit immediately after inspection
conducted by management.
 Disposal Objectives

• to avoid continuing carrying/inventory

costs
• to prevent further deterioration
thereby obtaining the fair return in
case of sale
• to relieve accountable officers of
unnecessary accountability
• to make available space for the agency
 Determination of Disposable Property

• 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 Agency’s functions/mandate
• In excess of requirements
• Has become dangerous or hazardous to use
 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/WMR, 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/WMR, 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. Pre-qualify bidders -10% bond,
latest FS, ITR.
5. Constitute the BAC on Disposal
to conduct the public bidding.
Duties of the BAC on Disposal

conduct the opening of bids

if first bidding fails, re-
advertise and conduct a second
bidding
if the second bidding fails,
resort to negotiated sale
recommend the award to the
winning bidder
 Creation of Disposal
Committees and
Secretariat (EO 888 and 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
 Bids and Awards Committee
on Disposal
Members:

One representative each from

Legal or Administrative,
Finance, and
Technical
Offices
Documentation
 Inventory and Inspection Report of
Unserviceable Property
Annex A

INVENTORY AND INSPECTION REPORT OF UNSERVICEABLE PROPERTY

As of ___________________
Fund: _________________________________________________

INVENTORY INSPECTION

Date Accumulated Net Book Appraised

Particulars Property No. Quantity Unit Cost Total Cost Remarks Disposition Remarks
Acquired Depreciation Value Value

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
 Inventory and Inspection Report of
Unserviceable Property
• This form is used for :
– disposal of vehicles,
– office equipment,
– furniture, and
– other properties, plant and equipment
which can no longer be repaired or
reconditioned and whose maintenance
cost of repair more than outweighs the
benefits and services that will be
derived from its continued use.
 Inventory and Inspection Report of
Unserviceable Property
• When accomplished, this form should contain

– the list of valuable parts of the article or equipment

which possesses intrinsic value or which may be useful
in making repairs to other articles or equipment

– list of missing parts, if any, which should be

accompanied by a certification of the property officer or
custodian as to whether the missing parts were removed
for future stock or have been utilized already for repair
purposes
 WASTE MATERIALS REP ORT

Agency

Place of Storage Date

ITEMS FOR DISPOSAL

ITEM QTY. UNIT DESCRIPTION RECORD OF SALES
O.R. No. Amount
1

TOTAL
Certified Correct: Disposal Approved:

Property Officer
CERTIFICATE OF INSPECTION

I hereby certify that the property enumerated above was disposed of as follows:

Ite m ________ Destroye d

Ite m ________ Sold at private sale
Ite m ________ Sold at public auction
Ite m ________ Transferred without cost to _______

Property Inspector: (Name & Signature) Witness to disposition:

 Waste Materials Report
• This form shall be used:

– to report all waste materials previously taken up in the

books as assets so that they may be properly disposed
of and dropped from the accounts

– in the disposal of waste materials which result from the

consumption or utilization of expandable materials, and
covers damaged equipment parts, empty containers, and
remnants salvaged from destroyed or damaged
property, plant and equipment.
 Other Forms/Documents

• 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.
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
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
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)
 MODES OF DISPOSAL
Public Bidding • Sealed Public Bidding
• Public Auction by Viva Voce
Negotiated Sale
Transfer
Barter
Donation
Condemnation/Destruction
1. SALE

a. Public Bidding

• general rule

• may be done through sealed

public bidding or by viva voce.
 Public Bidding/Auction
• 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
VIVA VOCE

• by word of mouth; oral;

orally
Situations/Cases for viva voce:

a. those involving disposable

property of insignificant value or
such nature that requires
immediate disposal

b. those involving waste materials

and/or spare parts of insignificant
value
SALE

b. Negotiated Sale

• resorted to as a consequence of
failed public bidding.
 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.
2. TRANSFER

• to another government
agency/entity.

• without cost or at an appraised

value.
3. BARTER

• a modified form of “Transfer”

wherein an agency transfers
property to another government
agency in exchange for another
piece of property.

• value of the property being

transferred may or may not be
equivalent to that being received.
BARTER

• resorted to where there is an

offer that would redound to the
interest of and is advantageous
to the government.
4. DONATION

• May be made to charitable,

scientific, educational or
cultural institutions.
5. DESTRUCTION OR
CONDEMNATION:

• resorted to only under any of the

following instances:

a. when the unserviceable property:

 has no commercial value,

 is unsalable,
 is hazardous, or
 is beyond economic repair;
5. DESTRUCTION OR
CONDEMNATION

b. when there is no willing receiver;

or

c. when the appraised value is less

than the administrative cost of sale.
5. DESTRUCTION OR
CONDEMNATION:

• Made in the presence of the

Disposal Committee
VALUELESS PROPERTY SHALL
BE CONDEMNED BY:

• Burning

• Pounding

• Breaking

• Shredding

• Throwing beyond recovery

 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.
 FLOW CHART OF THE DISPOSAL OF PROPERTY
AGENCY OFFICIALS COA
Property Officer / Admin. Officer / Accounting / Disposal Committee / BAC on Disposal / Director/HODE / 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, I & I the documents Appraisal Report Staff for appro-
Report, and WMR.
priate action
If property is eqpt., Conducts the
attached the Eqpt. bidding
Ledger Card. Appraisal Report 1-3
Eqpt. Checklist 1-2
2. Takes pictures of I & I Report 1-3 1. Reviews attached
Y Appraisal Report 1-2
the subject Eqpt Ledger Card 1 Document s
E Evaluates Eqpt. Checklist 1
property. Pictures 1-2 2. Conducts Insp. &
S the bids I & I Report 1-2
Appraisal
Data/
Documents
Data/ Eqpt Ledger Card 1
3. Prepares
Documents Pictures 1
I & I Report 1-3 Appraisal Review
Complete Report
Eqpt. Ledger Card 1
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
A COA Appraisal
Appraisal Rep. 3 Review Report 1-2
NO Eqpt. Checklist 2 Appraisal Rep 3
Failed 2nd I & I Report 3 Eqpt. Checklist 2
Bidding
Supplies/Attaches Pictures 2 I & I Report 3
the additional Pictures 2
Provides the following data
data/documents YES
on I & I Report:
- Unit Cost
Negotiates
- Total Cost the sale
- Accumulated Depreciation
Post Audit
- Net Book Value

Recommends Approves
the award the award
LEEZS/051304Th
PRICE Approach on Disposal/Appraisal
P inpoint - determine and identify the items
for disposal/appraisal

R ecord - list the items in the IIRUP or

WMR, take pictures

I nspect - check the existence and

condition

C ompute - solve for the Appraised Value

(AV)
E valuate - analyze the AVs & recommend
the most realistic/reasonable AV
 Similarities/Differences
ACQUISITION DISPOSITION
Need Not needed
PPMP/APP IIRUP/WMR–Dispo
Plan
BAC/TWG
BAC/Disposal Com.
ABC – ceiling
Appraised V – floor
Lowest CR Bid
Modes: Procurement- PB,
Highest Offer
LSB, Negotiated, Direct C,
Shopping, Repeat O.; Transfer;
Modes: Public
Donation; Confiscation / Seizure Auction, Negotiated
/Foreclosure; Production / Sale, Transfer, Barter,
Manufacture; Construction
Donation, Condemnation
APPRAISAL
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
 APPRAISAL
NOT EXACT SCIENCE
OPINION OF VALUE
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
APPRAISERS/VALUERS

DO NOT MAKE DATA

INTERPRET DATA
Appraisal Process
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
Inspection of Property for Appraisal

Documentation
Inspection and Inventory Report of
Unserviceable Property (IIRUP) (Appendix 74
of GAM)
- for vehicles, equipment, furniture, and
semi-expendable materials

Waste Material Report (WMR)

- for empty containers and remnants
from destroyed or damaged
equipment parts / fixed assets
Principles in computing for the Appraised Value

Unserviceable property -
at scrap/junk value

Repairable / no longer needed or

serviceable property - at CMV

Antiques, works of
arts and real estate -
by National Museum
and under separate
guidelines
 Reference Price Information

Basic Price Information

•Current Market value
•Acquisition Cost
•Replacement Cost, New
Contributory /Other
Price Information
•Prices from second -
hand shops
•Currency Exchange
Rate
 Guidelines in observing Condition of Property
•Very Good (VG), 80-100% - being used to its
fully specified purpose w/o being modified
•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

(CF of Missing Property - 100%)

 Revised Formulae on
Appraisal of Government Properties
except Real Estate, Antique Property
and Works of Art
 REVISED FORMULAE ON APPRAISAL
OF GOVERNMENT PROPERTIES
1. When property is still operational/functional or can be
repaired:

– When Current Market Value 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
 REVISED FORMULAE ON APPRAISAL
OF GOVERNMENT PROPERTIES
2. When property is still operational/functional or can be
repaired:

– When Replacement Cost-New is available

A. When the 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 (Table 2)
 REVISED FORMULAE ON APPRAISAL
OF GOVERNMENT PROPERTIES
3. When property is still operational/functional or can be
repaired:

– When Replacement Cost New is available

B. When the 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
 REVISED FORMULAE ON APPRAISAL
OF GOVERNMENT PROPERTIES
4. When property is still operational/functional or can be
repaired:
– When Acquisition Cost is available

A. 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
 REVISED FORMULAE ON APPRAISAL
OF GOVERNMENT PROPERTIES
5. When property is still operational/functional or can be
repaired:

– When Acquisition Cost is available

B. 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
 REVISED FORMULAE ON APPRAISAL
OF GOVERNMENT PROPERTIES

6. For waste materials and property which are

unserviceable and can no longer be
repaired/reconditioned :

AV = Junk Value

Note: Junk Value is based on prevailing price of scrap

metal or lumber, whichever is appropriate
 Examples of
Computation of
Appraised Value
A. When Current Market Value (CMV) of
a comparable data is available
Given: Based from the data contained under the Inventory and
Inspection Report of Unserviceable Property (Annex A1)

Item Description:
Toyota Revo Sport Runner 2000 Model 1.8 liter EFI
Gasoline engine, Automatic Transmission, Two tone
red Power lock, Power window, with Viper alarm, spoiler
and rook rack, Security Plate No. VAZ – 109, Engine
No. 7K-0337676, Body/Frame No. KF80-8016297
Acquisition Date: AD = December, 2000
Acquisition Cost: AC = P480,000.00

Date of Appraisal: October 3, 2006

Solution:
CF1
AV = CMV x
CF2

CMV = P330,000.00

Advertised Prices (similar brand and year model from Used Car Dealers)
as published in Buy and Sell Magazine, September 29,2006 issue:

a) P330,000.00

b) P365,000.00

c) P380,000.00

CF1 = Condition Factor of subject property

CF2 = Condition Factor of comparable property

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

Component %Weight CF

Engine 23 0.60 = 0.1380

Transmission 7 0.75 = 0.0525
Differential 5 0.75 = 0.0375
Body / Chassis 35 0.70 = 0.2450
Others 30 0.65 = 0.1950
Total: 0.6680

CF2 (see attached check list of subject property, Annex C2)

Component %Weight CF

Engine 23 0.70 = 0.1610

Transmission 7 0.70 = 0.0490
Differential 5 0.80 = 0.0400
Body / Chassis 35 0.75 = 0.2625
Others 30 0.75 = 0.2250
Total: 0.7375
Thus:

0.6680
AV = (P330,000.00)
0.7375

AV = P298,901.69

say P299,000.00 or P300,000.00

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

Given: Same vehicle/property used in the above CMV

method

Solution: To determine RCN of the vehicle under appraisal:

The cost of brand new engine available in the market is

P90,000.00/unit for the vehicle. Therefore:
Component % Weight
Engine 23 1 P 90,000.00
0.07 (P90,000.00)
Transmission 7 = = 27,391.00
0.23
0.05 (P90,000.00)
Differential 5 = = 19,565.00
0. 23
0.35 (P90,000.00)
Body/ Chassis 35 = = 136,956.00
0.23
0.30 (P90,000.00)
Others 30 = = 117,391.00
0.23
Total: P391,303.00
say: P391,000.00
Add Cost of Assembly (25% of Total Component Cost), OCM: 98,000.00
RCN = P 489,000.00
AV = RCN x ERUL
EUL
= P 489,000 x 5 yrs.
7 yrs.
= P 349,286.00
say P 350,000.00
 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 = P489,000.00

CF = 0.6680 (from CMV Method above)

AV = P489,000.00 x 0.6680

AV = P326,652.00 say P 327,000.00

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

50.00
=
40.00

CFF = 1.25

CF = 0.6680

AV = (P480,000.00) (1.25) (0.6680)

AV = P 400,800.00 say P 400,000.00

AV CMV = P 300,000.00
Seal
AV RCN (life in years) = P 350,000.00 the
Deal ?
AV RCN (cond. factor) = P 327,000.00

AV CFF = P 400,000.00
fair, understanding

Adventurous
loving and
sincere

pre-occupied
with sex