also not displayed prominently; it was presented just like the other information
about the property, such as the description, acquisition date, acquisition cost,
accountable officer, etc.
3.14 It is emphasized that the Property Number indicated on the property sticker serves
as a control mechanism to secure the inventoried PPE for easier identification by
the LGU, which will provide a readily available source of information for the
Inventory Committee in its subsequent physical inventory count.
3.15 In view of the foregoing, the reported balance of the PPE account in the financial
statements is unreliable.
3.16 We recommended and Management agreed to prioritize the completion of the
one-time PPE cleansing in full compliance with COA Circular No. 2020-006
by assigning dedicated personnel and temporarily relieving the members of
the Inventory Committee from their regular duties to ensure the timely
execution of all required procedures and to immediately reconcile the results
of the physical count with accounting and property records.
3.17 We further recommended and the Municipal Mayor agreed to file a request
for authority to derecognize non-existing/missing PPEs to the audit team, and
support its request with the certified lists required in Section 8.3 of COA
Circular No. 2020-006, to take full advantage of the one-time cleansing
privilege afforded by the Commission and establish accuracy of its PPE
balances reported in the financial statements.
3.18 Lastly, we recommended and the Inventory Committee agreed to adopt the
uniform numbering system for property numbers of PPE and require the
Property Unit to update the property stickers based on the prescribed format
and to include the required information under Sections 5.6 and 5.7 of the said
COA Circular.
Inventories were recognized as expense instead of inventory upon receipt - ₱7,173,567.76
4. Purchases of inventories totaling ₱7,173,567.76 were recognized as expense
instead of inventory upon receipt contrary to Section 114 of the New Government
Accounting System (NGAS) Manual for Local Government Units (LGUs), Volume
I, thus, eliminating the required accounting of the receipt and utilization
established through the use of Requisitions and Issue Slips (RIS) and Summary of
Supplies and Materials Issued (SSMI), which could result in the misstatement of
inventory and expense accounts at the end of the year.
4.1 Section 114 of the NGAS Manual for LGUs, Volume I, provides that purchases of
supplies and materials for stock, whether consumed within the accounting period
or not, shall be recorded as inventory using the perpetual inventory method. This
method requires maintaining a current inventory account in the General Ledger,
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