Purchase of supplies and other materials for COVID-19 amounting to P5,137,461.

25 were
not recorded under the perpetual inventory system, thus overstating the expense account
and understating the asset account pursuant to Philippine Public Sector Accounting
Standards (PPSAS) 12.

Paragraph 44 of PPSAS 12, states that:

When inventories are sold, exchanged, or distributed, the carrying amount of those
inventories shall be recognized as an expense in the period in which the related revenue is
recognized. If there is no related revenue, the expense is recognized when the goods are
distributed or the related service is rendered. The amount of any writedown of inventories and all
losses of inventories shall be recognized as an expense in the period the writedown or loss
occurs. The amount of any reversal of any writedown of inventories shall be recognized as a
reduction in the amount of inventories recognized as an expense in the period in which the
reversal occurs.

The details of the amount of P5,137,461.25 is summarized as follows:

Review of the recording of the foregoing transactions shows that an amount of

P4,278,831.50 was expensed outright, P675,704.90 was directly deducted to NGAs, P107,924.85
was booked as Building.

We recommend that the Municipal Mayor direct the Municipal Bookkeeper to record
properly the day-to-day transactions regarding the purchase of supplies and other materials
pursuant to PPSAS 12.

May we have your comments on the foregoing audit observation within five (5) calendar
days from receipt hereof.