5.12 Property records shall be updated based on the results of the physical
inventory and reconciled with accounting records to come up with the
reconciled balances of PPE accounts to be considered as the correct
balance of the agency's PPEs.”
1.3 The Statement of Financial Position as of December 31, 2023, reflected a total
PPE account balance (gross) of ₱113,077,252.99, excluding land, infrastructure
assets, and construction-in-progress. Compared with the Report on the Physical
Count of PPE (RPCPPE), there was a net variance of ₱72,894,810.00, as shown
in the table below:
Per GL Per RPCPPE Variance
Account Name (in ₱) (in ₱) (in ₱)
Land Improvements 7,930,024.64 0 0
Buildings and Other
59,491,185.27 0 0
Structures
Machinery and Equipment 26,390,094.34 0 0
Transportation Equipment 17,953,125.99 0 0
Furniture, Fixtures, and
1,312,822.75
Books
Total 113,077,252.99 40,182,442.99 (72,894,810.00)
1.4 It can be gleaned from the table that after the physical inventory taking, the
Inventory Committee did not reconcile the results of the count with the property
and accounting records. Also, the Audit Team could not attribute the material
discrepancy to specific PPE items because the Inventory Count Form (ICF) was
not prepared per sub-major account group as required in Annex A of COA
Circular 2020-006. The circular requires that the physical count be recorded and
documented in a standard ICF, which shall be the basis for the preparation of the
RPCPPE after the physical count. However, the PPE items in the ICF were
classified per office. Thus, the PPE items in the RPCPPE submitted by the
Municipal Treasurer were also grouped per office and not per sub-major account.
1.5 Furthermore, our interview with the Municipal Treasurer revealed that they have
not prepared the PIP, which will assist the inventory committee in strategizing
and planning how to conduct and complete the physical count within the
prescribed period. The PIP will contain the specific assignments and duties of the
committee members, the cut-off date, and a schedule specifying the dates and
locations of the inventory-taking activities from the start-up to the targeted
completion of the physical inventory.
1.6 In addition, our inquiry with the Municipal Accountant disclosed that they were
unable to reconcile the accounting records and property records because the
Municipal Treasurer had not completed the physical inventory of PPE at the time
the financial statements were made.
37
