The Civil Aviation Authority of the Philippines (CAAP), the country's civil aviation regulator created under Republic Act 9497 (Civil Aviation Authority Act of 2008) and attached to the Department of Transportation, failed to reconcile P3.779 billion in discrepancies between its property records and physical inventory, while leaving four parcels of land and 12 buildings and facilities used in its operations unrecorded, according to the Commission on Audit (CoA).

In its 2025 annual audit report, the state auditor flagged CAAP's Property and Equipment account, which had a carrying amount of P69.549 billion, after discovering a P3.779-billion gap between the agency's general ledger and its physical inventory records. Auditors also identified a separate P89.512-million variance between the general and subsidiary ledgers. Reconciling the general ledger against the physical count is the standard mechanism CoA relies on to verify that assets listed on an agency's books actually exist and remain in use.

Beyond the reconciliation failures, CAAP did not recognize four parcels of land spanning 526,770.61 square meters in Pasay City and Taguig City, along with 12 buildings and facilities located in Pasay City and Tagaytay City. The agency likewise kept P41.919 million worth of unserviceable or demolished properties on its books.

CoA directed CAAP's Inventory and Reconciliation Committee, together with its Supply and Accounting divisions, to resolve the discrepancies and make the necessary adjustments. The committee was tasked with identifying and addressing the remaining causes of variances between the books of account and the balances in the agency's Report on the Physical Count of Property, Plant, and Equipment.

The audit also uncovered a P1.479-billion discrepancy between the general and subsidiary ledgers covering CAAP's P3.852-billion Accounts Receivable and P290.596-million Operating Lease Receivable accounts. Past due receivables reached P4.132 billion, including P1.723 billion in dormant accounts and an uncollected P1.323-billion claim against an airline operator.

"The existence of substantial past due receivable accounts totaling P4.132 billion, including dormant accounts amounting to P1.723 billion reduced the funds available for CAAP's operations," CoA said.

The commission further found that CAAP understated its tax liabilities to the Bureau of Internal Revenue by at least P33.764 million after failing to withhold 25% final taxes amounting to P22.814 million and 12% value-added tax totaling P10.950 million on payments to non-resident foreign service providers.

Auditors likewise identified a P76.599-million unreconciled variance in CAAP's P180.214-million inventory account, as well as a failure to recognize impairment losses required under Philippine Accounting Standard 2.

Separately, P166.437 million in unused funds from completed and terminated projects had yet to be remitted to the Department of Transportation as of Dec. 31, 2025.

The report also noted P31.373 million in audit suspensions, P871.672 million in disallowances, and P30,913 in audit charges. Of the 169 audit recommendations issued in previous years, 81 remained unimplemented by CAAP management — a backlog CoA tracks in its succeeding annual audit reports.

These findings led CoA to render a qualified opinion — issued when specific discrepancies prevent auditors from fully validating an agency's reported financial position — on CAAP's financial statements for 2025 and 2024, saying it could not ascertain whether the agency's accounts faithfully represented its financial position under applicable accounting standards.

— Pexcel John Bacon