expenditures for supplies and materials. The account had a beginning balance of
₱1,250,408.49, with additional purchases amounting to ₱1,162,301.82 recorded
during the year. However, the entire balance of ₱2,412,710.31 remained
outstanding at year-end, with no corresponding reductions to reflect the actual
usage of supplies, as shown below:
Beginning Balance, January 1 ₱ 1,250,408.49
Additions/Debits 1,162,301.82
Deductions/Credits 0.00
Ending Balance, December 31 ₱ 2,412,710.31
9.3 Upon inquiry with the Municipal Accountant, it was revealed that the failure to
recognize the issuances as expenses was due to the non-receipt of the Summary of
Supplies and Materials Issued (SSMI) from the Office of the Municipal Treasurer.
9.4 In the absence of the SSMI, the Municipal Accountant had no basis to record the
usage of supplies and materials. As a result, the issuances were not recognized as
expenses, leading to the overstatement of the Other Supplies and Materials
Inventory account and equity account, and the understatement of the related
expense accounts. This situation distorts the Municipality's financial position and
performance for the year and raises concerns about the reliability and completeness
of its financial reports.
9.5 Moreover, the delay in recognizing expenditures compromises the accuracy of
budget utilization reports, which are essential in planning, decision-making, and
ensuring the efficient use of public funds. Without accurate data on inventory
consumption, management cannot make informed assessments about supply needs,
procurement planning, or resource allocation.
9.6 We recommended and the Municipal Treasurer agreed to strictly comply with
Section 121 of the NGAS Manual for LGUs, Volume I, by ensuring the regular
consolidation of the Requisition and Issue Slips (RIS) into the Summary of
Supplies and Materials Issued (SSMI) and submitting the same to the
Municipal Accountant in a timely manner.
9.7 We further recommended and the Municipal Accountant agreed to conduct a
thorough reconciliation of inventory balances and record the corresponding
journal entries to reflect the correct financial position and performance.
41
