The Commission on Audit (COA) has flagged the municipality of Mapun in Tawi-Tawi over its P8.82 million outright expenses in 2023 without first setting up an inventory account.
The lapse cast doubt on the propriety of the transactions, the COA said in its 2023 audit report on the municipality.
It said Mapun town spent a total of P3,165,789.63 on office supplies; P2,311,792.41 on fuel, oil and lubricants; P700,381.85 on agriculture and marine supplies; and P2,643,021.90 on other supplies and materials or a total of P8,820,985.79.
"The treatment of these procurements as outright expense resulted in the misstatement of assets and expenses accounts equivalent to the value of the remaining stocks at year-end which were not treated as assets," the COA said.
It said its audit team stressed the importance of maintaining an inventory account, which will enable it to reflect in its books the monthly balance of supplies and materials; and will also guide officials concerned to determine the quantity of the products to be procured in the succeeding month or quarter.
"For failure to adhere to the prescribed accounting rules and regulations on the inventory accounts, the asset account was not recognized while the related expense account was overstated," the COA said in its report.
"In addition, the practice of allowing the immediate distribution of inventory items in bulk to the end-users exposes it to risk of misuse, theft, and wasteful utilization," it said.
Thus, the COA urged officials of Mapun to adapt and maintain the asset method of recording the inventory items and require the coordination between the Municipal Accounting Office (MAO) and General Services Office (GSO) towards the proper implementation of the perpetual inventory method of recording all inventory items.
In doing so, the COA said the municipality would ensure proper accounting and promote better control in the receipt and issuance of supplies and materials.