5.4. This practice deviates from the proper process outlined in the NGAS Manual. While
it is correct to record the procurement as inventory upon payment, the
corresponding expenses should only be recognized upon actual issuance of supplies,
supported by RIS and SSMI documents duly prepared and submitted. The absence
of these key forms compromises the reliability of data used to update inventory
records and recognize expenses, thereby affecting the accuracy of the
Municipality’s financial statements.
5.5. Moreover, the Municipal Accountant disclosed that the same informal procedure is
being applied to other inventory items beyond medicines and medical supplies. This
raises broader concerns about the completeness and accuracy of all inventory
account balances reported in the Municipality’s books as of December 31, 2024.
5.6. In summary, the Municipality’s inability to follow the standard procedures in
recognizing the issuance of ₱2,235,426.25 worth of medicines and medical
supplies, specifically the improper preparation and timing of the RIS and SSMI,
resulted in non-compliance with the NGAS Manual for LGUs. This deviation not
only compromised the proper accounting and monitoring of inventory usage but
also raised concerns about the reliability of the reported balances of inventory
accounts as of year-end.
5.7. We recommended that Management observe the requisition procedures for
materials and the reporting of their issuance, as prescribed in the NGAS
Manual for LGUs, Volume I. This will help ensure proper monitoring and
accounting, as well as establish reliable inventory account balances in the
financial statements at year-end.
5.8. The Municipal Accountant stated that the requisition of supplies and materials, as
well as the reporting of issuances, were done by the end-users through logbooks.
Thus, the inventory balances can still be ascertained.
5.9. The Auditor would like to remind Management that while logbooks can help with
the requisition and issuance of supplies and materials, they are not a replacement
for the use of the prescribed RIS and SSMI forms. It is important to note that using
these forms is essential and should be followed.
5.10. Furthermore, the Auditor would like to note that, since the Municipal Accountant
only assumed office in CY 2022, there remains a concern regarding the accuracy of
inventory balances, especially those pertaining to prior periods, as proper
monitoring and the use of RIS and SSMI could not be ensured.
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