2.8. Additionally, an inquiry with the Municipal Accountant and a review of the
Accounts Payable supporting schedule for prior years revealed that certain
obligations were recorded based solely on obligation requests, rather than on
Inspection and Acceptance Reports (IARs) and/or suppliers' invoices, which serve
as evidence of actual delivery and acceptance of goods or services by Management.
2.9. This practice is inconsistent with Section 9, Volume 1 of the NGAS Manual, which
requires that obligations be recorded in the books only upon submission of
complete supporting documents to the Budget Officer for certification. Moreover,
Section 4(s), Volume 1 of the same Manual, states that “Liability shall be
recognized at the time goods and services are accepted or rendered and
supplier/creditor bills are received.” Therefore, the recording of obligations must
be supported by perfected contracts, billing statements, delivery receipts, inspection
and acceptance reports, and other pertinent documents to ensure the validity of the
claims.
2.10. The absence of these supporting documents indicates that the accounts recorded
were not valid claims at the time of recognition. This observation is further
supported by the fact that the Accounting Office reverted similar obligations to the
unappropriated surplus in CY 2018 and intends to conduct another reversion in CY
2025.
2.11. Due to the lack of availability of supporting documents to substantiate the AP
amounting to ₱2,084,423.19, of which ₱1,761,964.63 has been outstanding for
more than two years, we could not ascertain the validity of the accounts. These
accounts were also doubtful because it is unlikely that the suppliers or claimants
would wait for a long time to be paid or claim what was supposedly due to them.
Consequently, the financial statements might not have been fairly presented because
a substantial amount may no longer represent valid claims.
2.12. We recommended that the Municipal Accountant coordinate with the
Municipal Budget Officer and the Municipal Treasurer to determine whether
the Accounts Payable totaling ₱2,084,423.19, aged from over one year to more
than 10 years, were recorded based on obligation requests duly supported by
supplier bills/invoices and accomplished Inspection and Acceptance Reports,
to ensure the validity and accuracy of the liability account presented in the
financial statements.
2.13. We further recommended that, henceforth, the Municipal Accountant
recognize liabilities only at the time goods and services are accepted or
rendered and supplier or creditor bills are received, based on valid claims that
are adequately supported by sufficient and appropriate evidence.
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