2. The existence, validity, and correctness of the Inventory accounts totalling ₱6,709,224.00
as of December 31, 2024, have not been established due to (a) non-conduct of the year-end
physical count, (b) non-compliance with the Perpetual Inventory Method, and (c) non-
maintenance of supplies ledger cards and stock cards by the Offices of the Municipal
Accountant and Municipal Treasurer, respectively, thereby, affecting the fairness of the
presentation of these accounts in the FS.
3. Biological Assets valued at ₱1,715,503.00 that have been in the books for more than five
years, were not stated at fair value as of the reporting date due to the non-submission of a
complete Inventory Report of Breeding Stocks and the prevailing market price for each
item by the Municipal Agriculturist to the Municipal Accountant, thus, rendering the
existence and valuation of the account presented in the FS doubtful and unreliable.
Significant Audit Observations and Recommendations
In addition to the above-noted deficiencies, below are the significant audit observations and
recommendations noted in the course of the audit:
1. The valuation and accuracy of PPE with a net book value of ₱295,064,476.35 could not be
relied upon due to: (a) discrepancy between the PPE Lapsing Schedule and the Financial
Statements; (b) non- application of the required five percent residual value on some items;
and (c) non-recognition of depreciation expense on some PPE accounts, thereby misstating
the depreciation expense and PPE balances by an undetermined amount in the FS.
We reiterated our recommendation that the Municipal Accountant verify, review, and
analyze its depreciation schedule, taking into consideration the provisions provided under
PAG 4 and PAG 6 of IPSAS 17 to arrive at an accurate and reliable carrying balance of the
PPE, and thereafter prepare the appropriate adjusting entries.
2. The accuracy and reliability of the Local Road Network (LRN) account totaling
₱83,317,942.62 could not be ascertained due to various deficiencies noted, thereby
affecting the fair presentation of the account in the FS.
We recommended that the Local Chief Executive create an Inventory Committee to focus
on the physical count of local roads and direct the Municipal Engineer, Municipal
Accountant, and Municipal Treasurer to strictly comply with the accounting and reporting
guidelines on the local roads asset management system pursuant to COA Circular No.
2015-008 dated October 23, 2015.
We further recommended that the Local Chief Executive enjoin:
a. The Municipal Engineer provide the Municipal Accountant and the Municipal
Treasurer with a complete description and segregation of road components for road
projects; and
b. The Municipal Accountant disclose the total road network system in the Notes to FS.
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