Yolanda-hit town fails to conduct inventory on P23.5 million assets

CEBU, Philippines - The extent of damage of around P23.5 million worth of assets of the municipality of Medellin could no longer be ascertained after last year’s typhoon Yolanda.

The Commission on Audit said the municipal treasurer failed to conduct physical inventory after the typhoon to supposedly determine the extent of the damage to the property, plant and equipment with a net book value of P23,492,525.82 as of September 30, 2013.

“As a result, the validity, exis-tence and condition of these assets could not be ascertained,” said COA in its 2013 audit report. COA said the deficiency was noted in the 2012 Annual Audit Report and is reiterated to emphasize its effect in the financial statement.

Section 124 of the New Government Accounting System Manual states that the local chief executive shall require periodic physical inventory of supplies or property. The physical count of inventory items by type shall be conducted semestrally and reported in the Report of the Physical Count of Inventories.

“The municipal mayor failed to direct the municipal treasurer to conduct a complete physical count of all Property, Plant and Equipment accounts and submit its report in consonance to Section 124, Volume I of the New Government Accounting System (NGAS) Manual,” the state auditor said.

COA also noted that there are no property and ledger cards maintained as required by Section 114, Volume I of the NGAS Manual.

“The conduct of physical inventory is an indispensable procedure for checking the integrity of property custodianship and determine the existence and valuation of all the properties and equipment of the municipality so that the reconciliation of the amount recorded in the books may be effected,” COA said.

It stressed that physical count after the typhoon Yolanda is important to be able to assess the extent of the damage and the actual condition of the PPE and to determine the existence and valuation of the PPE totaling P23,492,525.82.

“In view of the absence of the physical inventory, the validity, existence and condition and correctness of the property, plant and equipment (PPE) accounts with a net book value of P23,492,525.82 that represents 81.80% of total assets could not be ascertained.

Alternative audit procedures cannot also be employed due to the absence of property records and acknowledgement receipts of equipment,” reads its audit report.

COA recommended that an inventory committee be formed and a physical count of all properties be conducted and a copy of the inventory report be submitted to the auditor as required by the pertinent provision in the NGAS Manual.

It is also recommended that the General Services Officer and the accountant should maintain property and PPE ledger cards to facilitate the reconciliation between inventory and accounting records.  (FREEMAN)