2.3.2.6. On the other hand, a representative from the Municipal Engineering
Office disclosed that they were not aware of the requirement to
provide the cost segregation of the road network to the Municipal
Accountant’s Office.
2.3.2.7. 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, therefore, should
have been depreciated separately following the straight-line method.
2.3.3. Non-disclosure of the total road network system in the Notes to Financial
Statements
2.3.3.1. 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.”
2.3.3.2. 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.
2.3.4. 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.
2.3.5. 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.
2.3.6. We recommended and Management agreed that the:
2.3.6.1. Inventory Committee conduct the physical count of the
Municipality’s local roads and thereafter, prepare and submit
the RPCLRN to the Audit Team, Municipal Accountant, and
Supply Officer;
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