2.5.3. Further, Item VII.c.1 of the same Circular requires the City Engineer to
provide the local accountant and GSO with a complete description and cost
segregation of the road components for road projects.
2.5.4. As defined under Item III.4 of the Circular, road asset components are “the
sub-components of a road which, having different useful life spans, need to
be booked and depreciated separately. They include: road lot, road pavement,
drainage and slope protection structures and other miscellaneous structures.”
2.5.5. The CAO maintains a schedule of its infrastructure accounts as reported in
the PPE Schedule, which includes, among others, a listing of constructed
Road Networks. However, no LRNLC was maintained for each road project
and its road asset components because the CEO did not provide complete
descriptions and cost segregation, as well as its repair history. Likewise, the
CGSO did not maintain the LRNPC due to the same lack of detailed
information.
2.5.6. 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.
2.6. Depreciation for all depreciable components of the road network was not
provided.
2.6.1. Item IV.13 of the Circular provides as follows:
4. The road lot component of the road network system shall not be
subject to depreciation.
12. Each depreciable component of the road network shall be
depreciated separately following the straight line method of
depreciation.
13. No residual value shall be provided for the depreciable components
of the road network system.
2.6.2. Contrary to the foregoing provision, we found that the City Accountant had
not provided depreciation for all depreciable components of the LRN since
the adoption of the Philippine Public Sector Accounting Standards in calendar
year (CY) 2015 (now International Public Sector Accounting Standards or
IPSAS). The Office admitted that this is primarily due to simple
inadvertence, and secondly, due to the lack of details of each road component
that would facilitate the computation of the corresponding depreciation.
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