Outright expense of inventories – ₱736,835.00
2. Purchases of inventories totaling ₱736,835.00 were recognized as expense instead
of inventory upon receipt contrary to Section IV of COA Circular No. 2014-002
dated April 15, 2014, and Section 114 of the New Government Accounting System
(NGAS) Manual for Local Government Units (LGUs), Volume I, thus, eliminating
the required accounting of the receipt and utilization established through the use
of Requisitions and Issue Slips (RIS) and Summary of Supplies and Materials
Issued (SSMI), which could result in the misstatement of inventory and expense
accounts at the end of the year.
2.1 Section 114 of the NGAS Manual for LGUs, Volume I, requires that purchases for
supplies and materials, regardless of whether or not they are consumed within the
accounting period, shall be recorded using the perpetual inventory method,
wherein an inventory account is maintained in the general ledger (GL) on a current
basis. Detailed inventory is maintained for each item; therefore, every purchase is
recorded in the inventory account. Related issuances of inventories shall be
recorded as they occur and shall be charged to the appropriate expense accounts,
except for those purchased out of the petty cash fund.
2.2 In CY 2024, Management requested to purchase accountable forms, agricultural
and marine supplies, animal/zoological supplies, drugs and medicines, food
supplies, medical, dental, and laboratory supplies, office supplies, and other
supplies and materials. Payments thereof were directly recorded in the books as
outright expenses by debiting the related expense account, as summarized below:
Account Amount
Other Supplies and Materials Expenses ₱16,279,892.85
Medical, Dental, and Laboratory Supplies Expenses 3,396,125.71
Office Supplies Expenses 2,513,894.50
Agricultural and Marine Supplies Expenses 2,249,399.00
Food Supplies Expenses 1,752,071.00
Animal/ Zoological Supplies Expenses 1,267,420.10
Accountable Forms Expenses 297,900.00
Drugs and Medicines Expenses 106,612.60
Total ₱27,863,315.76
2.3 Our review of the disbursement vouchers’ (DV) supporting documents revealed
that these were not supported by lists or records documenting the distribution or
consumption of the above supplies.
2.4 As a result of the foregoing, the stock balance could not be readily determined,
while the inventory account balances could not be ascertained, which could result
in the misstatement of inventory and expense accounts at the end of the year.
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