3.2. Our audit of the Municipality’s inventory account records revealed the following:
3.2.1. Non-conduct of year-end physical count
3.2.1.1. Section 124, Volume I, of the Manual on the New Government
Accounting System (NGAS) for Local Government Units (LGUs)
states that the local chief executive shall require the semestral
physical inventory of supplies or property and the submission of the
Report of the Physical Count of Inventories (RPCI) to the auditor
concerned not later than July 31 and January 31 of each year for the
first and second semesters, respectively.
3.2.1.2. However, in a phone inquiry, the Municipal Treasurer disclosed that
the Inventory Committee had not yet conducted the physical count
of the Municipality’s inventories, as they are still waiting to undergo
the necessary training. Hence, verification of the above amounts
could not be performed, affecting the existence and correctness of
the inventory accounts in the financial statements.
3.2.2. Non-maintenance of property ledger cards by the Accounting Office and
stock cards by the Municipal Treasurer’s Office
3.2.2.1. Section 114, Volume I of the same Manual, partly provides, thus:
“The Chief Accountant shall maintain the perpetual
inventory records comprising of Supplies Ledger Cards
(SLC) for each commodity/stock, xxx. Such ledger cards
shall contain the details of the property, plant and
equipment and livestock account in the inventory control
account in the general ledger.
The x x x Municipal Treasurer shall likewise maintain
stock cards and property cards for supplies; xxx in their
custody to account for the receipt and disposition of the
same. The balance per stock card/property cards should
always reconcile with the ledger cards of the accounting
unit. They should also reconcile with other property
records like Acknowledgement Receipt for Equipment
(ARE).”
3.2.2.2. Analysis of the inventory accounts showed that the balances of the
following accounts had not been moving for more than a year, to
wit:
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