Non-recording of expense upon issuance
4.8 Our examination of the schedule and the related supporting documents also revealed
that the items in Other Supplies and Materials Inventory had already been issued to
personnel of the Municipality with an ICS. As mentioned before, the Circular dictates
that from inventory under the appropriate semi-expendable property account, the item
should be recognized as an expense upon issuance to the end-user. The non-
recognition of these items overstates the inventory accounts and understates the
related expense accounts by ₱627,373.00 during the year.
Inadequate monitoring of semi-expendable properties using the prescribed forms
4.9 Inquiry with the Municipal Accountant disclosed that the Inventory Custodian Slip
(ICS) is the only document currently maintained by the Municipality to track the
issuance of semi-expendable properties. However, this falls short of the
documentation requirements outlined in Section 4.7 of COA Circular No. 2024-006,
which mandates the use of multiple forms, registries, and reports to ensure complete
monitoring and control.
4.10 The absence of these prescribed records may lead to ineffective tracking, reduced
accountability, and non-compliance with established financial and inventory
management procedures.
4.11 The Audit Team would like to bring Management’s attention to Annex B of the
Circular, which delineates the new accounts that will be utilized. Additionally, Annex
C provides illustrative accounting entries for various cases.
4.12 The enumerated discrepancies impair the fairness and reliability of the financial
statements, potentially affecting stakeholder decision-making and resulting in the
misrepresentation of financial information presented to users.
4.13 We recommended and the Municipal Accountant agreed to strictly adhere to the
accounting and reporting guidelines prescribed under COA Circular No. 2024-
006. Specifically, tangible items costing below ₱50,000.00 and meeting the
definition of semi-expendable property should be:
4.13.1 Recorded under the appropriate semi-expendable inventory accounts
upon acquisition, and
4.13.2 Recognized as expense upon issuance to end-users, with proper
accounting entries reflected in the books of accounts.
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