1.4. However, these PPE balances were not properly established or accounted for
because the Inventory Committee was not able to conduct a complete physical
count of PPE and reconcile it with the financial statements at year-end.
1.5. Our audit disclosed that the Inventory Committee was established through
Executive Order No. 14 dated April 3, 2023, composed of the Municipal Mayor as
Chairman, the Municipal Administrator as Vice Chairman, eight members from
various departments, and a Secretariat from within the LGU.
1.6. However, despite the inclusion of an audit observation on the non-conduct of one-
time cleansing in the Calendar Year (CY) 2022 Annual Audit Report, as of
December 31, 2024, the audit team has not received any inventory report from the
Local Government Unit (LGU), in contravention of the existing rules on property
accountability and inventory management.
1.7. Furthermore, review of the Agency Action Plan and Status of Implementation
(AAPSI) as of December 31, 2024, revealed that the most recent physical inventory
was conducted pursuant to Memorandum Order No. 44 dated June 20, 2023, and
the results were reviewed by the Inventory Committee. However, the inventory was
carried out using non-standard forms rather than the inventory forms prescribed by
COA Circulars, thereby compromising the accuracy and uniformity of the report.
1.8. In addition, the LGU acknowledged that the composition of the Inventory
Committee remains deficient, lacking representatives from the Department of
Education (DepEd) – Elementary and Secondary levels, as well as the Sangguniang
Kabataan (SK) Federation. Likewise, the Secretariat lacks representation from key
stakeholders such as the Accounting Unit, Barangays, DepEd, and SK.
Consequently, the LGU recognized the need to amend Executive Order No. 14, s.
2023, to address these structural deficiencies and improve the effectiveness of
inventory activities.
1.9. Finally, it is important to remember that the Audit Team has consistently
encouraged the Municipal Mayor and Department Heads at every entrance and exit
conference to implement the required one-time cleansing of PPE accounts, as stated
in COA Circular No. 2020-006 dated January 31, 2020. This one-time cleansing
allows the Municipality to update and reconcile its property records, ensuring the
accuracy of their presentation in the financial statements. By identifying and
reconciling discrepancies between the physical count and existing records, the
Municipality can enhance the reliability and completeness of its PPE information.
Accurate asset information, in turn, provides insights into the existence, condition,
usage, and value of the assets, helping the municipality optimize resource allocation
and operational efficiency, deter fraud, mismanagement, and misuse of government
resources, which in turn fosters financial integrity and accountability in property
management.
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