CAPITAL ASSET POLICIES AND PROCEDURES HANDBOOK

1. CAPITAL ASSET POLICIES AND PROCEDURES HANDBOOK

2. Session Objectives • Understand What Data Might Be Included in A Detailed Capital Asset Policies & Procedures Handbook • Discuss in Detail Each of the Topics Included in the Above Document

3. A Capital Asset Record System • Is It Integrated With The General Ledger System? • Can It Calculate Depreciation Expense By Function? • Can It Provide A Report Of Disposed Assets? • Can It Provide A Report Of Data By Function?

4. A Capital Asset Record System • What It Is • How it Works • Who Does What • How Much Detail

5. The Property Record • Property Identification Number • Fund and Account • Major Asset Class • Function and Activity • Acquisition Document Number • Acquisition Date

6. The Property Record • Method of Acquisition • Name and Address of Vendor • Description of Asset • Organization Unit • Location • Estimated Useful Life

7. The Property Record • Estimated Salvage Value • Date, Method, and Authorization of Disposition

8. Identify Reporting Requirements • Inventory Report by Location • Inventory Report by Stewardship • Inventory Report by Class • Depreciation Expense Report • Schedule of Capital Assets by Class • Schedule of changes in Capital Assets by Class

9. Identify Reporting Requirements • Schedule of Capital Assets by Function and Activity • Schedule of Changes in Capital Assets by Function and Activity • Asset Replacement Report • Online Access to Data • Inquiry by Property Identification Number • Inquiry by Location • Inquiry by Asset Class

10. Capital Asset Classifications • Specific Classifications • Thresholds

11. Capital Asset Classification Capital Assets Includes: -Land -Land Improvements -Buildings -Building Improvements -Vehicles -Machinery & Equipment -Works of Art & Historical Treasures -Infrastructure -In-tangible Assets

12. Capital Asset Thresholds • Two Primary Criteria • - Cost of the Asset • - Useful Life • National GFOA Recommends a $5,000 Threshold Per Unit • Threshold Needs To Cover 75% - 80% of The Costs

13. Capital Asset Thresholds • Spend Your Time Controlling Large Items • Land • Buildings • Vehicles

14. Capital Asset Thresholds • Capitalized Items Versus Controllable Items • Group Method Versus Individual Asset • A Class of Assets (Furniture and Fixtures) • An Individual Asset (A School Bus)

15. Capital Asset Classification • Divide Between Major Class and Subclass • Major Class Usually equates to General Ledger Asset Accounts For Ease in Financial Reporting

16. Land • Potential Subclasses • - Vacant Parcel (Deed) • - Land Under a Building (Deed) • - Land Under the Roads

17. Land • Includes the Cost of Preparing Land for Use • Separate Land Cost from Cost of Buildings or Improvements if all Three are Purchased Together • Park Lands

18. Land Improvements • Fencing • Paving (i.e., Parking Lots) • Lighting • Plumbing (e.g., water facets) • Landscaping??

19. Buildings • Components: • Building Shell • Roof • Elevator • Electrical System • Plumbing System • Heating/Air Conditioning System

20. Buildings Improvements • Sometimes These Costs are Just Capitalized as Buildings • Alarm Systems • Carpeting • Shelving and Cabinets • Clock Systems

21. Buildings Improvements • Public Address & Speaker Systems Where Wiring Is "Built-in". • Curtains

22. Vehicles • Vehicle Tags • All Rolling Stock • Trucks • Automobiles • Buses

23. Machinery and Equipment • Computer Equipment • Furniture and Fixtures • Weapons • Heavy Equipment • Radios and Cell Phones

24. Historical Treasures and Works of Art • Paintings • Statutes • Totem Poles

25. GASBS 34 Requirements • Governments Should Capitalize Works Of Art, Historical Treasures, And Similar Assets At Their Historical Cost Or Fair Value At Date Of Donation (Estimated If Necessary) Whether They Are Held As Individual Items Or In A Collection.

26. GASBS 34 Requirements • Governments Are Encouraged, But Not Required, To Capitalize A Collection (And All Additions To That Collection) Whether Donated Or Purchased That Meets All Of The Following Conditions. The Collection Is: • Held For Public Exhibition, Education, Or Research In Furtherance Of Public Service, Rather Than Financial Gain • Protected, Kept Unencumbered, Cared For, And Preserved • Subject To An Organizational Policy That Requires The Proceeds From Sales Of Collection Items To Be Used To Acquire Other Items For Collections.

27. Intangibles • Software – Mainframe, Site Licenses, Upgrades, Maintenance • Radio Station License

28. Infrastructure

29. Betterments • What Are Betterments? • Extends The Estimated Life • Exceeds A Certain Cost • A Big Issue • It Depends Upon The Property Record

30. GAAP Values • Historical Cost • Cost Of Capital Assets In Accordance With Costs • Prevailing At Date Of Construction • Installation • Fair Market Value • Estimated Amount At Which The Capital Asset Might Exchange Between Buyer And Seller Neither Under Compulsion, Having Reasonable Knowledge Of All Relevant Facts – With Equity To Both

31. Inventorying Capital Asset • Frequency • Process • Discrepancies

32. Frequency Original Inventory Re-Inventory – At Least Annually Responsibility

33. The Inventory Process Project Planning Meeting Inclusions Exclusions Tagging @ the Same Time? Utilizing Existing Inventories

34. When To Inventory • There Is No Correct Time • During The Normal Workday • Nights Or Weekends

35. Inventory - Land • Listed By Parcel • Assessor's Parcel Number • Lot, Block, Track • Use • Location

36. Inventory - Buildings • Building Type • Use • Location

37. Inventory - Buildings • Building Type • Use • Location

38. Inventory – Machinery and Equipment • Quantity • Description • Manufacturer • Serial Number • Year Acquired

39. Inventory – Do’s and Don’ts • Don't Start Inventories with Existing Inventory Lists • Inventory by Location • Provide Advance Notice • Avoid Abbreviations • Generic Name • Write Legibly

40. Inventory – Do’s and Don’ts • Organize Thoughts Before Making Notations • Review Field Notes • Use Available Resources ---- Ask Questions • Maintain Contact with Those Responsible for the Project • If You're Behind/Ahead of Schedule---Keep People Advised

41. Changes in Capital Assets • Additions • Disposals • Transfers • Surplus

42. Additions • Purchased or Constructed • Leased • Contributed • Acquired Via Trades

43. Disposals • Trade-ins • Sales – Sealed Bids - Auction • Cannibalization - Buses • Contributed to Other Governments

44. Transfers • Between Departments • Between Buildings • Any Budget Impact?

45. Surplus • Adding to Surplus • Taking from Surplus

46. The Eight “W’s” to Tagging • Why Tag? • Which Assets to Tag? • What Types of Tags to Use? • Where to Purchase the Tags? • What Should Appear on the Tag? • When to Tag? • Who Tags? • Where is the Tag Placed?

47. Tagging Purpose • Primary Purpose of a Tagging is to Maintain a Positive Identification of Assets Owned by the Government

48. Why Tag? • Quick and Accurate Method of Identifying • Facilitate Re-inventory • Controls the Location of Assets • Assists in Maintaining Assets • Provides Common Ground for Communication

49. Which Assets Should Be Tagged? • Influenced by Purpose of Tagging • Accounting Issues • Property Accountability • Types of Activities • Cost of Tagging

50. What Type of Tags Should We Use? • Metal • Decal Type • Bar Coded • Stencil/Painted