3.3.3. Non-disclosure of the total road network system in the Notes to Financial
Statements
3.3.3.1. Item IV.2 of the Circular states that the total road network system
shall be disclosed in the agency’s Notes to FS. The standard format
is provided in Annex B thereof:
“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.”
3.3.4. However, contrary to the above requirement, our review of the Notes to
Financial Statements revealed that the Municipal Accountant only disclosed
the total balance of the Road Networks account. This omission limits the FS
users from being adequately informed of the nature and scope of the Road
Network account.
3.3.5. In the absence of the aforementioned records and reports, we could not
ascertain whether local road networks under the Municipality’s jurisdiction
were recorded completely in the books of account.
3.3.6. In sum, the foregoing observations rendered the reported Road Networks
account balance doubtful and unreliable, thereby affecting the overall fair
presentation of the Infrastructure Assets account in the Municipality’s
financial statements.
3.4. We recommended and the Local Chief Executive agreed to create an Inventory
Committee to focus on the physical count of local roads and direct the Municipal
Engineer, Municipal Accountant, and Municipal Treasurer to strictly comply
with the accounting and reporting guidelines on the local roads asset
management system pursuant to COA Circular No. 2015-008 dated November
23, 2015.
3.5. We further recommended and the Local Chief Executive agreed to enjoin:
3.5.1. The Municipal Engineer provide the Municipal Accountant and the
Municipal Treasurer with a complete description and segregation of road
components for road projects; and
3.5.2. The Municipal Accountant disclose the total road network system in the
Notes to FS.
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