Findings No.1 COA Annual Audit Report 2005

July 28, 2008

The Inventory Committee failed to conduct a physical count of the property, plant and equipment valued at P409,432,344.49 in violation of the provisions of Section 124 of NGAS Manual thus rendering the account balance doubtful. Likewise, the Accounting and General Services Office failed to maintain the appropriate ledger and property cards in violation of Sec. 114 of same manual.

Section 124 of the NGAS Manual states that “The Local Chief Executive shall require periodic physical inventory of supplies or property. Physical count of property, plant and equipment by type shall be made annually and reported on the Report of Physical Count of Property, Plant and Equipment (RPCPPE). This shall be submitted to the Auditor concerned not later than January 31 of each year.” and

Section 114 of the same manual provides that “The Chief Accountant shall maintain the perpetual inventory records comprising of the Property, Plant and Equipment Ledger Card (PPELC) for each category of plant, property and equipment and Work and Other Animals and Breeding Stocks Ledger Card (WOABSLC) for each type of livestock. Such ledger cards shall contain the details of the property, plant and equipment and livestock accounts in the inventory control account in the general ledger.

“The General Services Officer or the Municipal Treasurer, as the case may be, shall likewise maintain property cards for property, plant and equipment and work animals in their custody to account for the receipt and disposition of the same. The balance per property cards should always reconcile with the ledger cards of the accounting unit. They should reconcile with other property records like Acknowledgement Receipt for Equipment (ARE).”

Verification revealed that due to the non-prioritization of the financial control on the safeguarding of assets the Inventory Committee failed to conduct the inventory-taking of their property, plant and equipment costing P409,432,344.49 as of December 31, 2005.

In addition, it was further disclosed that the Accounting Division and General Services Office did not maintain appropriate ledger cards and property cards, respectively. Further, the recorded accountability for assets cannot be compared with the existing assets and any differences could not be acted upon/rectified.

The inadequacy of the accounting records did not permit the Auditor to apply alternative audit procedures. Such conditions were not in conformity with the provisions of Sections 124 and 114 of NGAS Manual.

In effect, the accuracy and the correctness of the account balance of P409,432,344.49 rendered doubtful.

The management commented that the Accounting Division are in the process of maintaining and updating the ledger cards for reconciliation of the differences, if any.

Recommendation:

Implement the provisions of Section 124 and 114 of NGAS Manual to facilitate accurate recording of the Property, Plant and Equipment. Likewise, reconciliation with the accounting records should be regularly conducted to ensure correctness.

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Written by admin · Filed Under Commission on Audit, Tangub City