1.10. However, it is our observation that the procedures followed by the Inventory
Committee did not also follow the basic guidelines outlined in the COA Circular as
follows:
1.10.1. The Inventory Committee only designated the department heads to conduct
the physical count in their respective offices instead of being fully responsible
for the actual count;
1.10.2. The Inventory Committee has an approved Physical Inventory Plan (PIP),
however, the assignments and duties of its members were not specified;
1.10.3. The members of the Inventory Committee were not temporarily relieved of
their regular duties so that they could devote their full time in the conduct of
their physical count until its completion; and
1.10.4. The inventory-taking was not witnessed by a representative of the
Commission on Audit.
1.11. Finally, it is important to remember that the audit team has consistently encouraged
the Municipal Mayor and Department Heads at every entrance and exit conference to
implement the required one-time cleansing of PPE accounts, as stated in COA
Circular No. 2020-006 dated January 31, 2020. This one-time cleansing allows the
Municipality to update and reconcile its property records, ensuring the accuracy of
their presentation in the financial statements. By identifying and reconciling
discrepancies between the physical count and existing records, the Municipality can
enhance the reliability and completeness of its PPE information. Accurate asset
information, in turn, provides insights into the existence, condition, usage, and value
of the assets, helping the municipality optimize resource allocation and operational
efficiency, deter fraud, mismanagement, and misuse of government resources, which
in turn fosters financial integrity and accountability in property management.
1.12. This observation was communicated to Management through Audit Observation
Memorandum (AOM) No. 2025-01(2024)-Ayungon dated March 19, 2025.
1.13. We recommended that the Municipal Mayor:
1.13.1. Create a new Inventory Committee composed of an adequate number of
members to complete the physical inventory in three months or less with
at least one member each from the accounting and property
divisions/unit;
1.13.2. Instruct the Inventory Committee to prepare a Physical Inventory Plan
(PIP) with specified duties and assignments of the members and submit
the PIP to the audit team before the scheduled inventory-taking
activities;
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