1.7 However, our verification of transactions related to the recording and
reclassification of the above properties revealed that these were recorded and
reclassified into inventory accounts, where most of them remained despite the
issuance of COA Circular No. 2024-006, which stated that the reclassified items
should be reclassified again into the appropriate semi-expendable accounts.
Initially, the audit team identified semi-expendable items amounting to
₱51,530,887.31 which were recorded in inventories and remained in their
respective accounts, despite issuance to end-users, as shown below:
Account Semi-expendable items
Other Supplies and Materials Inventory 28,554,866.90
Other Supplies Inventory 21,862,655.02
Other Property Equipment 1,113,365.39
Total ₱51,530,887.31
1.8 For instance, the reclassification of various semi-expendables was recorded as
follows, regardless of whether these items were acquired and issued before CY
2024:
Account Debit Credit
Inventory xxxxx
Accumulated Depreciation xxxxx
Property, Plant and Equipment xxxxx
1.1 The City Accountant explained that although they reclassified these semi-
expendable items to inventory accounts, they had closed some of the issued
inventories’ carrying amounts, totaling ₱4,748,980.64 to Prior Period Adjustment
(PPA) in CY 2023, detailed as follows:
Semi-expendable Adjusted in
Account Unadjusted
items 2023
Other Supplies and Materials 28,554,866.90 2,900,737.57 25,654,129.33
Inventory
Other Supplies Inventory 21,862,655.02 1,848,243.07 20,014,411.95
Other Property Equipment 1,113,365.39 0.00 1,113,365.39
Total ₱51,530,887.31 ₱4,748,980.64 ₱46,781,906.67
1.2 While the audit team acknowledges Management's initiative to record and
reclassify semi-expendable items to inventory accounts, in the absence of
appropriate accounting guidelines, these items should have been properly
reclassified to the accounts listed in the Revised Chart of Accounts issued by the
Commission in COA Circular 2024-006 and corresponding prior period
adjustments should have been made.
1.3 It is also emphasized that the existing Acknowledgment Receipts for Equipment
(ARE) will be replaced by Inventory Custodian Slips (ICS) for tangible items
below ₱50,000.00 that were acquired and issued prior to CY 2024 and classified
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