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GFP Working Group Property and Equipment Policy Update

GFP Working Group Property and Equipment Policy Update. OUSD(AT&L) P&EP Office Ms. Amber Propert 23 October 2013. Agenda. Important Policy Changes for GPP&E Financial Reporting Overview of the Capitalization Threshold study Analysis Recommendation Policy moving forward

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GFP Working Group Property and Equipment Policy Update

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  1. GFP Working GroupProperty and Equipment PolicyUpdate OUSD(AT&L) P&EP Office Ms. Amber Propert 23 October 2013

  2. Agenda • Important Policy Changes for GPP&E Financial Reporting • Overview of the Capitalization Threshold study • Analysis • Recommendation • Policy moving forward • Other P&EP Activities • APSR Identification Project • Status of APSR Checklist • IUID Parent-Child Project • Questions and Next steps

  3. Memo – Elimination of Military Equipment Definition and Increase to Capitalization Threshold

  4. Key Guidance Provided in Memo

  5. Overview

  6. Background on Capitalization Threshold Study • DoD capitalization threshold, $100k, established in 1999 excluded Military Equipment (ME) and may no longer be an appropriate threshold • OUSD(AT&L) P&EP supported capitalization threshold study in 2009 • Assumption was analyzing military equipment (ME) and general equipment (GE) together will significantly change the mix of assets being capitalized, warranting a study to assess the affects of a change in threshold (source: Mr. Easton’s “2013 Capitalization Threshold Study” memo issued 1 March 2013)

  7. Initial Factors to Consider • Individual Component thresholds were not ideal • Bulk purchases were excluded as a possible threshold option, would result in losing ability to account for individual assets • Desired threshold as high as possible, while creating a minimal impact on DoD and individual Component financial statements • Army’s low dollar/high density asset mix creates challenges • Initial target for acceptable capitalization rates were in low to mid 90 percent range (re: 2009 study)

  8. Preliminary Recommendations • Recommended options (as of 5 June 2013 – presented at meeting with Mr. Easton): • Recommendations and impacts based on implementing new threshold on retroactive approach • Intent was to capitalize, at least, 90% of assets at DoD and Component levels • Analysis excluded WCF • Army asset mix created challenges even at $250k threshold • OUSD(C) and OIG supported direction of analysis; however, determined 90% capitalization rate is unacceptable • Prospective implementation was discussed and agreed upon • Further analysis was required to support recommendations and measure future impacts based on new implementation direction

  9. New Capitalization Threshold • Change to capitalization threshold policy: • $1M Navy (+USMC) and AF capitalization threshold (GF assets only); $250k DoD-wide capitalization threshold • Recommendation and analysis coordinated with DoD stakeholders, and well received by OUSD(C), OIG, and FIAR communities • Determine process and actions required to implement new capitalization threshold • P&EP will provide support and guidance to Components for implementation of new capitalization threshold

  10. APSR Validation Analysis – Project Charter

  11. APSR Checklist • Checklist overview: • Tool to identify capabilities essential for a system to operate as an acceptable and auditable APSR for equipment • Reference guidance and directives that systems need to adhere to • Checklist determines difference between core requirements and addition capabilities that add value but are not required • “Bigger picture”: define parameters of an acceptable APSR • Checklist currently being coordinated with DPAP

  12. Checklist Snapshot

  13. Feasibility Study of IUID Registry Data for ValuationProject Charter

  14. Questions? Comments? Contact: Amber Propert (Amber.L.Propert.civ@mail.mil) For general questions and information, visit our website: http://www.acq.osd.mil/pepolicy/ Thank You!

  15. Back-up Slides

  16. Summary & Component Breakdown • Data Source: ME and GE asset listings which support the FY2012 Financial Statements from all Components and Agencies identified as Material for GE in latest FIAR Guidance • Navy (including USMC), Air Force, and Army account for 98.17% of total acquisition cost and 96.63% of total number of assets

  17. DoDConsolidated Analysis DoD-wide Capitalization Thresholds by Capitalization Rates

  18. Component Specific Analysis Component Capitalization Thresholds by Capitalization Rates

  19. Recommendations for Consideration DoD Level Impact of Various Threshold Component Impact of Various Threshold

  20. Statement of Net Cost Analysis • Leveraging the 2009 study and further discussions on SNC impacts, 2% was determined to be the maximum acceptable change *Only analyzed Components with separate WCF statements in financial reporting Impact on SNC is less than 2% for potential recommendations

  21. Impacts of Prospective Implementation GF Assets: Projected Five Year Impact For $1M/$200k scenario, the impact on equipment (net) to DoD and its Components for Year 1 and Year 5 are less than 5%, resulting in a capitalization rate greater than 95% WCF Assets: Projected Five Year Impact For $200k scenario, the impact on equipment (net) to DoD and its Components for Year 1 and Year 5 are less than 6%, resulting in a capitalization rate greater than 94%

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