The inventory balance could not be verified because the municipality did not keep perpetual inventory records, submitted physical count reports late, and failed to maintain basic stock records.

Why It Matters

Recommended Actions

• Require the (a) MA to (i) strictly adhere to the PIM in the recording of inventories for fair presentation o f Inventory accounts in the financial statements
• And (ii) maintain an updated SLCs in required format to account for all the receipts and issuances of inventories
• (b) GSO Officer to (i) conduct periodic physical count of inventories and submit the results thereof to the Audit Team within the prescribed period
• (ii) maintain SCs in the required format for the recording of receipts and issuances of inventories
• And (iii) perform regular reconciliation of inventory records with the MAO.

Original Audit Finding Excerpt

"The existence and reliability of the Inventory accounts balance totaling ₱4,006,185.05 as of December 31, 2022 were not established due to (a) non-application of the Perpetual Inventory Method (PIM) in the recording of inventories; (b) delayed submission of the Report on the Physical Count of Inventories (RPCI) as of year-end; and (c) non-maintenance of basic inventory records contrary to the pertinent provisions of the Manual on the New Government Accounting System (MNGAS) for Local Government Units (LGUs), Volume I."

Source Document