7.10. The CGSO's erroneous practice of preparing the RIS immediately, instead of
allowing the requisitioning office to do so, resulted in recognizing expenses for the
entire amount purchased, even though not all the items had actually been distributed
to the end-users or intended recipients. This highlights weak controls within the
City’s property management system. An effective property management system
requires the segregation of duties related to requisitioning, receiving and moving, and
preparing and maintaining property records. We also wish to emphasize that
unconsumed supplies in the possession of the City’s offices or departments, acting as
temporary custodians for the CGSO, are still part of the City’s supplies inventory and
should be subject to a physical count by the CGSO.
7.11. On the other hand, the CAO’s practice of recording supplies and materials as outright
expenses contradicts Section 114, Chapter 7 of the Manual on the NGAS for LGUs,
Volume I. Furthermore, the CGSO's and CAO's inability to maintain the stock cards
and supply ledger cards, respectively, as required under Section 120 of the manual
prevented the City from accurately tracking inventory balances and determining
accountability for potential losses of unissued supplies.
7.12. In summary, the non-observance of the basic accounting principles and policies on
the use of the perpetual inventory system and the incorrect preparation of the RIS for
inventories not yet issued to the intended end-users and lack of sufficient
documentation exposed the inventories to risk of loss or misuse. This has also
resulted to an understatement of inventory accounts and an overstatement of the
expense accounts.
7.13. We recommended that the CGSO comply with the following:
7.13.1. Assign personnel to prepare and maintain stock cards for each item of
inventory;
7.13.2. Prioritize the submission of the AIR and other supporting documents to
the CAO for the recording in the supply ledger cards;
7.13.3. Require the requisitioning offices to periodically submit the RIS for
supplies consumed, including the appropriate distribution list for
inventories intended for distribution;
7.13.4. Consolidate the RIS from the requisitioning offices weekly and prepare
the SSMI for immediate submission to the CAO; and
7.13.5. Conduct semestral physical count of inventory items by type and prepare
the Report on the Physical Count of Inventories (RPCI) after reconciling
this with the accounting records and making the necessary adjustments;
and submit the RPCI to COA not later than July 31 and January 31 of
each year for the first and second semesters, respectively.
62
