“Section 121. Reporting on Issuance of Supplies/Materials – The General
Services Officer or the Local Treasurer, as the case may be, shall
consolidate weekly the RIS for which supplies and materials were issued
using the Summary of Supplies and Materials Issued (SSMI). The SSMI
together with the original copy of the RIS shall be submitted to the Chief
Accountant, who shall compute the cost of supplies and ending inventory
using the moving average method. Based on the SSMI, a JEV shall be
prepared to record the expenditures using appropriate expenditure accounts.
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Section 124. Inventory of Supplies or Property – The local chief executive
shall require periodic physical inventory of supplies or property. Physical
count of inventory items by type shall be conducted semestrally and
reported in the Report of the Physical Count of Inventories (RPCI). This
shall be submitted to the Auditor concerned not later than July 31, and
January 31 of each year for the first and second semesters, respectively.”
4.2. Our review of the financial statements revealed that the inventory account showed a
balance of ₱9,617,624.95 as of December 31, 2024. The inventory account is
composed of Inventory Held for Distribution and Inventory Held for Consumption
(Appendix 3).
4.3. Accounting records show that the Municipality was unable to utilize the inventory
items but our inquiry with the Municipal Treasurer disclosed that these inventory
items such as the Welfare Goods for Distribution of ₱3,805,500.00 and Drugs and
Medicines for Distribution of ₱245,963.00 were already distributed to the identified
constituents.
4.4. Furthermore, the Municipal Accountant has affirmed that inventory items were
already issued to these recipients but due to the failure of the Municipal Treasurer
to submit the Summaries of Supplies and Materials Issued (SSMI), utilization of the
inventory items was not recorded thus the balance of the inventory items remain in
the books of accounts and has been non-moving for more than 5 years.
4.5. Finally, the physical count of inventory items by type was also not conducted
semestrally and reported in the Report of the Physical Count of Inventories (RPCI).
4.6. In view of all the foregoing, the existence and condition as well as the reliability of
the inventory account balance could not be ascertained, thus affecting the fair
presentation of the account in the financial statements.
4.7. This observation was communicated to Management through Audit Observation
Memorandum (AOM) No. 2025-03(2024)-Bindoy dated February 12, 2025.
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