including its repair history. Likewise, the CGSO did not maintain the LRNPC due to
the same lack of detailed information.
1.12. In the absence of the LRNLCs and LRNPCs, reconciliation of both records with the
RPCLRN could not be done, rendering the balance of the Road Networks account
unreliable. Moreover, the non-segregation of costs for each road component affects
the computation of depreciation considering that the depreciable components have
different useful life spans, and should therefore be depreciated separately using the
straight-line method. Per verification, the Accounting Office started providing
depreciation on the LRNs in calendar year (CY) 2022.
Lack of full disclosure of the total road network system in the Notes to the
Financial Statements (NFS)
1.13. Item IV.2 of the Circular states that the total road network system shall be disclosed
in the Agency’s NFS. The standard format is provided in Annex B thereof,
presented as follows:
“The LGU has a total of _____ kilometers of roads with a total cost of
Php ________. For the year ended, the agency spent a total of Php
______ for major repairs and Php _____ for the regular maintenance.
Reductions in the amount of Php_______ were recorded due to
derecognition, Php ______ for impairment and Php_______
impairment were reversed.”
1.14. Contrary to the aforementioned requirement, we found that the City Accountant did
not disclose the Road Networks account separately in the NFS. Instead, it was
included as part of Infrastructure Assets under PPE, thereby, not informing the users
of the financial statements about the nature of the account.
1.15. The aforementioned deficiencies made the Road Networks account questionable and
unreliable, thereby affecting the fairness of presentation of the Infrastructure Assets
account in the City’s financial statements.
1.16. We recommended that the City Accounting, Engineering, and General Services
Offices strictly comply with the accounting and reporting guidelines on the local
roads asset management system, and properly coordinate with one another in
fulfilling their respective duties and responsibilities as outlined in COA Circular
No. 2015-008 dated November 23, 2015.
1.17. We also recommended that henceforth, the Inventory Committee conduct the
annual physical count of all its LRN in accordance with regulations, ensuring
that all necessary details are reported separately in the RPCLRN for submission
to the Auditor and Accounting Office not later than January 31 of each year.
The RPCLRN shall be reconciled with the accounting records, and the necessary
adjusting entries shall be prepared before the statement date.
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