1.10. This observation was communicated to Management through Audit Observation
Memorandum No. 2025-02(2024)-Manjuyod dated April 21, 2025.
1.11. We recommended that the Municipal Mayor:
1.11.1. Create a new Inventory Committee composed of an adequate number
of members to complete the physical inventory in three months or less
with at least one member each from the accounting and property
divisions/unit;
1.11.2. Instruct the Inventory Committee to prepare a Physical Inventory Plan
(PIP) with specified duties and assignments of the members and submit
the PIP to the audit team before the scheduled inventory-taking
activities;
1.11.3. Temporarily relieve the members of the Inventory Committee of all
their regular duties so they can fully devote their time to conducting the
physical inventory until its completion;
1.11.4. Request for a COA representative to witness the inventory-taking; and
1.11.5. Direct the Inventory Committee to strictly follow the general and
procedural guidelines outlined in COA Circular No. 2020-006 dated
January 31, 2020 in the conduct of the physical count of PPE and the
one-time cleansing of PPE account balances.
1.12. During the exit conference, the Municipal Accountant acknowledged that one cause
of delay in the one-time cleansing was due to the members of the inventory
committee being department heads. However, she informed the Audit Team that a
focal person was assigned per department. Their latest action was the preparation of
the PIP but this was not submitted to the Audit Team yet.
1.13. Furthermore, the Municipal Accountant asked if partial disposal may be done.
Partial disposal may be done provided that everything is recorded. It should also be
noted that disposal is not exclusively done through auction. It may also be done
through donation or condemnation, among others.
Classification of Loans Payable
2. The entire Loans Payable account amounting to ₱95,973,110.17 was incorrectly
classified as a current liability despite including amortizations due from 2026 to
2039, which does not align with Section 80 of IPSAS 1 – Presentation of Financial
Statements, thereby overstating current liabilities by ₱89,158,886.28, understating
the non-current liabilities by the same amount, and affecting the fair presentation
and reliability of the financial statements as of year-end.
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