Step Up Develops Guide on Road Asset Valuation

LRMPATStep Up Consulting Services was contracted by the Louis Berger Group, Inc. to draft the guidelines n Provincial Road Asset Valuation based on inputs from the Department of Public Works and Highways,  the Department of Interior and Local Government, and Institute of Public Works Engineering Australia.

Road asset accounting is a problematic practice in the Philippines. The most recent pronouncement in road asset accounting was the New Government Accounting Systems (NGAS) promulgated in 2001 through COA Circular 2001-005. While the NGAS, through the NGAS Manual, prescribes the rules in accounting for road assets, the corresponding effect on financial statements is severe when the time the road assets are completed.  Road assets on construction are debited to a Construction in Progress account but this is eventually closed to Government Equity account upon road asset completion.  As a result, road assets are no longer valued in the financial statements but are only disclosed as Public Infrastructure in the Notes to Financial Statements.

This accounting treatment has several effects. Road assets are no longer treated as assets but expenses, theoretically, as the values are closed against the equity account. Correspondingly, monitoring these assets become virtually impossible because they are not considered as part of the fixed assets inventory, and thus, are not provided with depreciation.  While road condition of the province has improved because of the rehabilitation, the provincial LGU’s value (represented by its equity account) decreased because the assets are technically charged against the equity account.  Under normal circumstances, this could not have been possible.  Asset acquisitions should have increased the net value of a local government unit.

This engagement is critical to ensure that road assets are valued in financial statements of local government units.

Step Up Trains Community Leaders on Enterprise Management

A participant explains the asset and opportunities map during the enterprise development session.
A participant explains the asset and opportunities map during the enterprise development session.

PROCESS Bohol, Inc., commissioned Step Up Consulting to train its community leaders in Ubay, Bohol the basics of financial management.  The training, attended by more than 30 community leaders, was intended to assist the organizations manage their enterprises better and prepare them for eventual phase-out of PROCESS support.

Step Up has more than 10 years of conducting community-based trainings with different audiences – farmers, women micro-entrepreneurs, non-profit leaders, and local government leaders.  It uses participatory approaches in conducting its capacity building programs and makes use of “games” in order to “teach concepts”.  As one of the women leaders in this training remarked – “It is the first time that I understood complex financial management concepts in an easy, phased way”.

In the training, Step Up taught the community leaders the basics of enterprise management, how credit management is critical to business operations, and the different steps in ensuring that business decisions can be made based on available financial data.