1.10. Management stated that the City Mayor had previously created an Inventory
Committee but was still unable to fully comply with the inventory because of the
difficulty/complexity of the task.
Unreliable Local Road Network (LRN) balance - ₱545,659,882.49
2. The accuracy and reliability of the LRN account balance totaling ₱545,659,882.49
could not be ascertained due to the: (a) non-conduct of inventory of local roads and
non-preparation of a separate Report on the Physical Count of LRN (RPCLRN); (b)
non-maintenance of the LRN Ledger Card (LRNLC) and LRN Property Card
(LRNPC) showing a complete description and cost segregation of LRN components;
(c) non-provision of depreciation for LRN items; and (d) lack of full disclosure of the
total road networks in the Notes to the Financial Statements, contrary to COA
Circular No. 2015-008, thereby affecting the fair presentation of the account in the
financial statements.
2.1. The contribution of infrastructure development to the economic advancement of any
entity cannot be denied. As the number of constructed roads and developed road
networks increases, there arises a need for efficient management systems given the
growing complexities of infrastructure development and the challenges that
characterize a growing economy. These challenges include aging infrastructure,
limited budgets for capital outlays, reduced staff resources amid rising public
expectations, and demand for good governance. Thus, COA Circular No. 2015-008
dated November 23, 2015, was issued prescribing the “Accounting and Reporting
Guidelines on the Local Roads Asset Management System” for the fair presentation
of the Infrastructure Assets account in the financial statements.
2.2. The Circular covers the accounting guidelines for local roads and road network
systems on initial recognition, subsequent measurement and de-recognition to ensure
that all roads are properly valued and recorded. It also includes the transitory
provisions for the transfer of the local roads account from the Registry of Public
Infrastructure to the books of accounts of the Local Government Unit (LGU)
responsible for the management of these roads.
2.3. In our review of the financial statements as of December 31, 2024, we noted that the
Road Networks account (1-07-03-010), all recorded under the General Fund (GF)
costing ₱545,659,882.49, comprising 40.27 per cent of the total Infrastructure Assets,
showed the following deficiencies contrary to the aforementioned Circular, to wit:
2.4. Non-conduct of inventory of local roads and non-preparation of RPCLRN and
Report of the Local Road Network (RLRN)
2.4.1. Item V(1) of the above-mentioned 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
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