The value of inventories and supplies was reported too high by about ₱6.74 million. Items already used up were still counted as assets, and medicines still in stock were incorrectly treated as expenses. This misstates the municipality's assets and expenses.

Why It Matters

Recommended Actions

• Require the MA to (i) ensure strict compliance with the Perpetual Inventory Method (PIM) in the recording of inventories upon purchase
• And (ii) make the necessary adjustments in the books to properly recognize inventories on-hand at year-end and recognize as expense the distributed stocks accordingly.

Original Audit Finding Excerpt

"net overstatement of the Inventory account balance of ₱9,137,451.70 by ₱6,742,537.19 attributed to the overstatement of the reported year-end balance by ₱8,355,000.00 due to non-recognition of issued inventories costing the same as expense; and understatement by ₱1,612,462.81 due to recognition of drugs and medicines still on hand valued at the same amount as expense contrary to International Public Sector Accounting Standards (IPSAS) No. 12 and Chapter 7 of the Manual on the NGAS for LGUs, Volume I."

Source Document