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Implementation of Tangible Capital Asset (TCA) Reporting

Implementation of Tangible Capital Asset (TCA) Reporting. TPFR Information Sessions Fall 2007. Topics to be discussed. Why & What? Relevant PSAB Handbook Section & Guideline When? Timelines Where we’ve been and where we’re going ? Background & Steps Taken to Date Next Steps.

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Implementation of Tangible Capital Asset (TCA) Reporting

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  1. Implementation of Tangible Capital Asset (TCA) Reporting TPFR Information Sessions Fall 2007

  2. Topics to be discussed • Why & What? • Relevant PSAB Handbook Section & Guideline • When? • Timelines • Where we’ve been and where we’re going ? • Background & Steps Taken to Date • Next Steps

  3. PSAB Handbook Section & Guideline PS 3150 - Tangible Capital Assets • Handbook section approved September 2006 • Applies to all levels of governments • Applicable for fiscal years starting on or after Jan. 1, 2009 • Includes the following: • definitions of TCA • how to account for them • how to measure and amortize them • when to write them down and how to dispose of them • presentation and disclosure requirements • transitional provisions for local governments

  4. PSAB Handbook Section & Guideline PSG-7: Tangible Capital Assets for Local Governments • Provide transitional guidance on presenting information in notes or schedules to your summarized financial statements • Applicable for fiscal years starting on or after January 1, 2007 = 2007/08 school year • Disclose information by major asset category • Disclose information that you have, as well as excluded categories

  5. Implementation Timeframe • 2006/07 = No implementation requirements • 2007/08 = Note disclosure requirements • Using March 2008 data • 2008/09 = Full Implementation requirements • In order to have the information available for the government fiscal year April 2009 – March 2010 Early

  6. What’s been done……Where we’ve been • Jan - Apr 2005 • Prepared a valuation methodology for land and building assets • Received acceptance from the OAGO in April 05 • “Capital Asset Valuation Proposal” is on the TPFR website • May 2005 • Hired ORC to assist in gathering and preparing input data for the Book Value Calculator (BVC) application tool • Created the “CAPEdu” website tool for board data entry

  7. What’s been done……Where we’ve been • June – October 2005 • Created an Excel template • Collected first round of TCA data from DSB’s • For land & building assets owned as of March 31, 2005 • Data was verified then dumped into “CAPEdu” • June 2005 • ICAO Meeting = Proposals relating to consolidation • Book Value Calculator & Specified Procedures • September 2005 • First collection of 5-month capital activities report • (April - Aug 05) • Specified procedure reports on this data

  8. What’s been done……Where we’ve been • Oct 2005 • ICAO Meeting = Update on consolidation issues • Oct 2005 - March 2006 • Boards entered historical cost information in CAPEdu (if available) • Other information where cost was not available • Portable structures module - year and size only • Boards locked data as confirmation process • ORC Appraisers valued buildings and land • Input information into BVC • Dec 2005 • Interim review of input data by OAGO

  9. What’s been done…... Where we’ve been • March 2006 • First collection of 7-month capital activities report (Sep 05 - Mar 06) • Specified procedures reports on this data • May 2006 • Prepared capital entries for Public Accounts of Ontario • May – June 2006 • OAGO Audit • October 2006 • Issued 1st draft Tangible Capital Assets Guide for discussion

  10. What’s been done …... Where we’ve been • January 2007 • ICAO Meeting = Discussion of draft TCA Guide and Implementation Issues • Issue 2nd Draft TCA Guide • March 2007 • Information session for DSB’s • TCA Implementation Issues and Systems • September 2007 • Issued Final TCA Guide • Re-opened CAPEdu website (view only) • http://204.40.6.15/CAP-Edu • Previous logins still active – hit “Forgot Password” • New logins – email Sangita.Barman@ontario.ca

  11. Overview of TCA Guide “School Board and School Authorities Tangible Capital Assets Accounting Policies and Implementation Guide” • TCA Classes • Established different classes • What’s included in each class • Capitalization threshold for each class • Useful life of each class • Method of reporting each class • How to Deal with Changes to Useful Life • TCA Management & Internal Controls • Available on TPFR site: • http://tpfr.edu.gov.on.ca/Reporting_Entity_PolicyDocuments.htm

  12. Pooling of Assets • Similar capital assets are grouped in one tangible capital asset class • No individual tracking of each tangible capital asset in the class • Assets remain in the asset class until it is fully amortized - no actual disposals, “deemed disposals” No significant advantage of tracking the assets on an individual basis - balance would not be materially different

  13. Non-Pooled Buildings (40 yrs) Other Buildings (20 yrs) Land & Land Improvements with Infinite Lives (nil) Land Improvements with Finite Lives (15 yrs) Equipment (15 yrs) Vehicles < 1 ton (5 yrs) Vehicles = or > 1 ton (10 yrs) Pooled Portable Structures (20 yrs) Furniture (10 yrs) Equipment (5 yrs) Equipment (10 yrs) Computer Hardware (5 yrs) Computer Software (5 yrs) Accounting for TCA Classes

  14. Capitalization Thresholds Buildings (3 classes) $10,000 Land $10,000* Land Improvements $10,000 Furniture $ 5,000** Equipment (5 yrs) $ 5,000** Equipment (10 yrs) $ 5,000** Equipment (15 yrs) $ 5,000 Vehicles (2 classes) $ 5,000 Computer Hardware $ 5,000*** Computer Software $ 5,000 * Capitalize all upon initial purchase ** Threshold doesn’t apply to first-time school equipping ** * Or if bulk purchase order exceeds $25,000

  15. March 31, 2005 Excel CAPEdu HC Entered Other Data Entered Records Locked Appraised Values Info Input into BVC Output from BVC Gross Book Value Accumulated Amortization Remaining Service Life + Excel Apr – Aug 05 + Excel Sep 05 – Mar 06 + Excel Apr – Aug 06 + Excel Sep 06 – Mar 07 Gross Book Value Accumulated Amortization Remaining Service Life March 31, 2007 Data Flow Summary

  16. Next Steps…Ministry of Education • Sep - Oct 2007: • Post March 05 - March 07 Data for Boards via EFIS Reporting portal (data flow summary) • Distribute suggested accounts to use for TCA • Develop process to run BVC for missed assets or major errors. • Post supporting documentation on TPFR site: • TCA Valuation Methodology • Support letter from OAGO • BVC documentation • Etc

  17. Next Steps….District school boards • Oct 2007 - Aug 2009 • Establish opening balances for other asset classes • Prepare supporting documentation for external auditors to validate opening land & building asset classes • Aug 2008 • Boards report TCA data on land & buildings in their notes to their financial statements • Aug 2009 • Full TCA reporting on DSB Financial Statements!!!

  18. Next Steps….External Auditors • Oct 2007 - Aug 2009: • Audit the estimated opening values for land & buildings • Using provincial data from the BVC and Capital Activity Reports submitted between Mar 2005 and March 2007 • Audit the estimated opening values for other asset classes • Using valuation methodologies as discussed with the DSB

  19. Questions ??????????

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