AUDIT OBSERVATIONS AND RECOMMENDATIONS
A. FINANCIAL AUDIT
Unidentified Local Road Networks Balance of ₱373,712,461.98
1. The Local Road Networks account totaling ₱373,712,461.98 remains unidentified
due to the absence of the required inventory of local road networks, inconsistent
with paragraph 27 of IPSAS 1 and COA Circular No. 2015-008, thus affecting the
accurate presentation of the account in the Financial Statements.
1.1 Paragraph 27 of IPSAS 1 provides that financial statements shall fairly present
an entity’s financial position, performance, and cash flows of an entity. To
achieve fair presentation, there must be a faithful representation of the effects
of transactions, other events, and conditions in accordance with the definitions
and recognition criteria for assets, liabilities, revenue, and expenses as outlined
in the IPSASs.
1.2 COA Circular No. 2015-008 dated November 23, 2015 prescribes the
accounting and reporting guidelines for local road asset management. It
requires, among others, the conduct of an inventory of local roads within the
jurisdiction of the LGU, as well as the reconciliation of the inventory list, as
reflected in the local road inventory report and road map, with those recorded
in the Registry of Public Infrastructure to ensure their accuracy and existence.
1.3 An examination of the Abstract of Subsidiary Ledger Balances for Local Road
Networks (10703010) revealed that a lump sum amount, described as “Road
Networks-Registry of Public Infrastructure,” was included, totalling
₱373,712,461.98, as presented in the table below:
Account Code Fund Amount
10703010-RPI-2015 General Fund (GF) – Proper ₱ 112,543,366.53
10703010-RPI-2015 GF – 20% Development Fund 261,169,095.45
Total ₱373,712,461.98
1.5 The Office of the Provincial Accountant has stated that these accounts pertain
to items in the registry that are still awaiting identification. Once the specific
road networks are determined, the amounts will be adjusted to the appropriate
subsidiary account to accurately reflect the provincial roads.
1.6 On November 7, 2024, the Audit Team inquired with the Provincial General
Services Officer (PGSO) regarding the submission of the Report on the Physical
Count of Local Road Network (RPCLRN) as part of the reconciliation
requirements. We noted that the Inventory Committee was unable to conduct
the required inventory, as mandated by Item VI (3) of the Circular, which
specifies that the Inventory Committee must prepare the report using the form
prescribed in Annex C of the same Circular.
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