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Audit Report

The financial audit of GGNNAMAN Sand and Gravel for 2020 found several issues: 1) Official receipts for sales transactions were not issued sequentially and lacked required information. 2) The company failed to track inventory levels properly, resulting in reported sales quantities exceeding purchases. 3) Physical inventory counts were not performed regularly to verify remaining stock levels. As a result, sales were made when insufficient inventory was on hand. The auditor recommends strengthening controls over official receipts and properly monitoring inventory levels through regular physical counts to ensure accurate financial reporting.

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Caila Chin Dinoy
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33 views

Audit Report

The financial audit of GGNNAMAN Sand and Gravel for 2020 found several issues: 1) Official receipts for sales transactions were not issued sequentially and lacked required information. 2) The company failed to track inventory levels properly, resulting in reported sales quantities exceeding purchases. 3) Physical inventory counts were not performed regularly to verify remaining stock levels. As a result, sales were made when insufficient inventory was on hand. The auditor recommends strengthening controls over official receipts and properly monitoring inventory levels through regular physical counts to ensure accurate financial reporting.

Uploaded by

Caila Chin Dinoy
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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EXECUTIVE SUMMARY

Highlights of Financial Operations


The financial statements of the Municipality as of 31, 2012 were not submitted within the
reglementary Ik•riod and up to this writings thus hindered us from determining its financial
operations during the year.
Scope of Audit
A financial audit was conducted on the operations of the GGNNAMAN Sand and Gravel
for the year ended December 31, 2020 which focused on the evaluation on their financial
statements. The audit consists of the review of the operating procedures and verification of
accounts.
Auditor's Opinion on the Financial Statements
We were tasked to audit the Accounting Records of the GGNNAMAN Sand and Gravel
as of December 31, 2020 and the related Financial statements, value added tax and income tax
return for the year then ended. These financial statements are the responsibility of the
management. In our opinion,
Significant Findings and Recommendations
The following as the significant findings and the corresponding recommendations:
1. Official Receipts (OR's) in the sales transactions were not issued in strict numerical
sequence, were not filled up properly and incomplete information.
Example:
Some OR lacks name, date and item description.
The OR for the month of June is doubled and the outcome makes the OR number
not in chronological order according to their respective dates.

We recommend that the collectors/cashier issue in chronological order the prenumbered


official receipts in strict numerical sequence. In preparing the ORS, all copies shall be
exact copies or carbon reproductions in all respects of the original. All ORS shall be
prepared with a date, number, and the amount together with the purpose for which the
payment has been received. The address of the payor shall also be indicated on the
official receipt to facilitate communication with him if necessary.

2. The company failed to check the initial balances on hand, receipts, issues and the ending
balances on hand of the inventories. Consequentially, ORs in Sales Transactions were
issued continuously without looking after the inventories on hand as of the date. This
resulted to an excess in the sales quantity over purchases quantity.
Example:

Date Items Stocks on Hand Sales Deficient


Sand 116 120 4
Gravel:
Jan 25- Feb 7
Grade 2 14 32 18
Cement 25 50 25
Sand 38 80 42
Feb 8-14 Gravel:
Grade 1 31 36 5
Gravel:
Feb 22-28
Grade 2 25 30 5
Gravel:
Apr 25- May 8 Grade 1 46 66 20
Grade 2 34 60 26
Sand 119 127 8
Gravel:
June 27- July 3 Grade 1 74 134 60
Grade 2 68 113 45
Cement 80 99 19
July 4-10 Sand 30 35 5
July 11-17 Sand 32 48 16
Sept 19-25 Sand 38 44 6
Sand 38 71 33
Gravel:
Sept 26- Oct 9 Grade 1 36 72 36
Grade 2 36 55 19
Cement 65 69 4
Sand 40 43 3
Oct 10-16
Cement 35 41 6

We recommend that the company shall check the inventories from time to time by
conducting a physical count to determine the remaining stocks on hand. GGNNAMAN
Sand and Gravel sales and purchases transactions show false information because they
continue to engage in sales activities despite insufficient stocks on hand which has
resulted in a deficiency. It is a clear evidence that some of their sales were made out of
lies, given the fact that they benefited without giving something in return.

3.

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