Inventory Accounting System

The Asset Method will be used in recording disbursements when expenditures

apply to more than just the accounting period, under the New Government
Accounting System. Expense shall be recorded upon utilization or consumption.
Supplies and materials purchased charged from Petty cash fund for emergency use
should be treated as outright expense.
Semi- expendable items will be taken up as fixed assets. Under the new
government accounting system, Inventories-Semi-Expendable Supplies account is
no longer included in the new chart of accounts and payable accounts should be
recognized upon receipt of goods and services.
Purchase of supplies and materials for stock shall be recorded as Inventory
account following the Perpetual Inventory Method. Moving Average method of
costing shall be used for costing the inventories, it is the calculating of cost on the
basis of weighted average o the date of issue.
COA Circular No. 2005-002 dated April 14, 2005 provides that small tangible
items that with more than one year useful life shall recorded as inventories upon
acquisition and expensed upon issuance. Per COA Circular No. 2009-001 dated
February 12, 2009, a copy of a purchase order and supporting documents within 5
working days from the issuance thereof should be submitted to the auditor to
review.
Purchase and Construction of Fixed Assets
Fixed cost are charged to capital outlay. COA Circular No. 2009-001 provides
hat within 5 working days from execution of the contract by the government
agencies or GOCC, a copy of said contract and each documents that shall be
furnished to the auditor of the agency concerned. Auditor shall review the contract
within 5-20 working days. The auditor will call the attention of the management if
he/she notice defects and deficiencies in the contract and suggest corrective
measures, and if not rectifiable it will be totally or partially void. The head of the
agency will be notified within 24 hours from determination of such defects.

The contract shall be forwarded and its supporting documents by the auditor
for technical review to the Technical Audit Specialist assigned in auditing unit or to
the Regional Technical Services Office (RTSO).