3.2.2. Non-compliance with the Perpetual Inventory Method
3.2.2.1. Sections 51 and 114, Volume 1, of the NGAS Manual for LGUs
provide the proper recording and accounting for purchases of
supplies and materials in an agency. Further, the same sections state
that purchases of supplies and materials for stock, regardless of
whether they are consumed within the accounting period, shall be
recorded as assets using the inventory account following the
Perpetual Inventory Method.
3.2.2.2. Using the Perpetual Inventory Method, any purchases of supplies
and materials for stock should be recorded as inventory, irrespective
of whether they are used up within the accounting period. This
method involves maintaining an inventory control account in the
General Ledger on an ongoing basis. In addition, detailed inventory
records must be kept for each inventory item.
3.2.2.3. Our analysis of the year-end balances of the inventory accounts
disclosed that out of the ₱3,013,247.40 balance at year-end,
₱1,729,343.19 were carried over from CY 2023 ending balances,
broken down as follows:
Account Amount
Office Supplies Inventory ₱ 0.02
Accountable Forms, Plates, and Stickers 324,208.02
Drugs and Medicines Inventory 0.15
Construction Materials Inventory 1,405,135.00
Total ₱ 1,729,343.19
3.2.2.4. The Municipal Accountant confirmed that the Perpetual Inventory
Method was not implemented, as this had long been their practice.
He also mentioned that, due to the absence of a warehouse for
storing supplies and materials, all items delivered were immediately
issued to the respective requesting offices.
3.2.2.5. Moreover, the Municipal Accountant disclosed that purchases of
supplies and materials were expensed immediately without
recording a corresponding inventory account. The supplies
immediately charged to expense accounts amounted to
₱23,892,119.57 in CY 2024, which consists of the following:
Account Amount
Office Supplies Expenses ₱ 1,489,688.08
Accountable Forms Expenses 432,845.00
Animal/Zoological Supplies Expenses 187,450.00
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