Local Road Network (LRN)
3. The accuracy and reliability of the Local Road Network (LRN) account totaling
₱83,317,942.62 could not be ascertained due to various deficiencies noted, contrary to
COA Circular No. 2015-008 dated November 23, 2015, thereby affecting the fair
presentation of the account in the financial statements.
3.1. COA Circular No. 2015-008, dated November 23, 2015, prescribes the accounting
and reporting guidelines for the local roads asset management system, ensuring a fair
presentation of Infrastructure Assets in the financial statements.
3.2. The circular covers the accounting guidelines for local roads and road network
systems, including initial recognition, subsequent measurement, and derecognition,
to ensure that all roads are properly valued and recorded.
3.3. Our review of the financial statements as of December 31, 2024, disclosed that the
Road Networks account with a net book value of ₱83,317,942.62 showed the
following deficiencies, which were inconsistent with the subject circular:
3.3.1. Non-conduct of inventory of local roads and non-preparation of RPCLRN
3.3.1.1. Item V(1) of the Circular requires the conduct of an inventory of
local roads under the LGU’s jurisdiction, while Item VI(3) thereof
requires the Inventory Committee to prepare the Report on the
Physical Count of the Road Network (RPCLRN) to be submitted to
the Auditor concerned and Accounting Division/Unit not later than
January 31 of each year.
3.3.1.2. In a phone interview, the Municipal Treasurer and the Municipal
Accountant confirmed that no physical inventory of local roads was
conducted because the Municipal Mayor had not issued an office
order establishing the Inventory Committee responsible for carrying
out the task.
3.3.1.3. Consequently, no RPCLRN was prepared, which could have
detailed the classification of road networks, such as road lots,
pavements, drainage, slope protection structures, and other
structures, including the construction dates and current physical
condition.
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