Local Road Network (LRN)
2. The accuracy and reliability of the LRN account totaling ₱13,165,828.64 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.
2.1. COA Circular No. 2015-008 dated November 23, 2015, prescribes the accounting
and reporting guidelines on the local roads asset management system for a fair
presentation of the account Infrastructure Assets in the financial statements.
2.2. The circular covers the accounting guidelines for local road and road network systems
on initial recognition, subsequent measurement, and derecognition to ensure that all
roads are properly valued and recorded.
2.3. Our review of the financial statements as of December 31, 2024, disclosed that the
Road Networks account with a net book value of ₱13,165,828.64 showed the
following deficiencies, which were inconsistent with the subject circular:
2.3.1. Non-conduct of inventory of local roads and non-preparation of Report on the
Physical Count of the Road Network (RPCLRN)
2.3.1.1. 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 RPCLRN to be
submitted to the Auditor concerned and Accounting Division/Unit
not later than January 31 of each year.
2.3.1.2. In a phone interview, the Acting Municipal Treasurer confirmed that
no physical count of local roads had been conducted due to the
absence of a reconstituted Inventory Committee to carry out the
task. He added that although the Municipality previously had an
Inventory Committee, the Office Order creating it could no longer
be located, and its members comprising the said committee could
not be recalled.
2.3.1.3. Management’s response to the Audit Query dated April 10, 2025,
also confirmed that a physical count of the local roads had not been
conducted.
2.3.1.4. 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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