P1.2-B PhilMech inventory flagged
THE COMMISSION on Audit (CoA) has flagged the Philippine Center for Postharvest Development and Mechanization (PhilMech) over its unrecorded inventories worth P1.2 billion, resulting in inconsistencies in its financial statements.
In a Viber message to BusinessWorld, PhilMech Director Dionisio G. Alvindia said: “PhilMech’s accounting department has already derecognized P1.08 billion or 93% of the tagged unrecorded inventory. The remaining 7% or ₱87,431,506 are being prepared to be adjusted this June 2024.”
CoA auditors noted the unrecorded inventories of donated agricultural machinery resulted in the overstatement of the agency’s inventories and understatement of maintenance and operating accounts.
“The ‘unrecorded issued inventories’ pertain to the already received, possessed, and donated Property, Plant and Equipment (PPE) to rice farmers’ cooperatives and associations (FCAs), which were affected by the ‘record timing difference’ in recognizing the releases of those PPEs in our financial books of accounts,” explained Mr. Alvindia.
State auditors noted that a total of 1,855 donated machinery in the form of tractors, rice mills, and harvesters, among others, worth P1.2 billion has already been donated to farming cooperatives and local government units despite remaining in the agency’s year-end inventory account.
CoA recommended that PhilMech direct its accounting department to “implement and streamline control processes” to properly settle the inventory transaction of donated machinery.
PhilMech’s mandate is to commercialize and mechanize the domestic agriculture sector’s postharvest mechanisms to reduce agricultural product losses.
CoA also flagged PhilMech’s low disbursement rate of the Rice Competitiveness Enhancement Fund’s (RCEF) mechanization program.
“The foregoing benefits notwithstanding, gaps in the implementation of the Program were noted such as low disbursement rate of 7.62% or ₱388.58 million of the ₱5.10-billion total cash allocations received for FY (Fiscal Year) 2023,” the audit agency said.
Mr. Alvindia said the low disbursement rate is due to incomplete billing documents filed by suppliers of agricultural machinery.
“The target disbursements did not materialize as expected, but we are now accelerating the disbursements of funds at the close of this first semester to P19.8 billion, or more than 76% of the total obligated amount, to be disbursed for prior year payables,” he added.
RCEF receives P10 billion a year from collected rice tariffs. Of the total, it sets aside P5 billion to fund farm mechanization. — Kenneth Christiane L. Basilio