SESSION ID: ACT20 FIXED ASSET ACCOUNTING OVERVIEW · 2017-04-19 · SESSION ID: ACT20 FIXED ASSET...

SESSION ID: ACT20

FIXED ASSET ACCOUNTING OVERVIEW

The views and opinions expressed in this presentation are those of the authors and do notnecessarily reflect those of CASBO.

Fixed Asset Accounting / What do We Need?

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

What we think the requirements are

What we currently do What we really need to do

Why are fixed asset inventories done?GASB-34 RequirementsFull accrual accounting including depreciation & statements

Education Code 35168LEAs must maintain inventory of equipment > $500

Uniform Guidance (UG) or 2 CFR 200LEAs must maintain proper records of equipment acquired with

federal funds


Why are fixed asset inventories done?Determine / Establish Value

Address uncertainty

Collect / Verify Information

Protect Your Position or Asset


Benefits of a Fixed Asset InventoryIncreased accountability and control

Record special notes and pre-existing tag numbers

Identify active/inactive assets

Identify unrecorded additions, disposals and transfers

Serial number and model number tracking

Account for lost and misplaced equipment

Automates future inventories (more efficient and accurate!)

Customized reports and data files

Maintain asset cost records

Upload data to existing systems


California Education Code 35168The governing board of each school district, shall establish and maintain a historical inventory, or an audit trace inventory system, or any other inventory system authorized by the State Board of Education, which shall contain the description, name, identification numbers, and original cost of all items of equipment acquired by it whose current market value exceeds five hundred dollars ($500) per item, the date of acquisition, the location of use, and the time and mode of disposal. A reasonable estimate of the original cost may be used if the actual original cost is unknown.

Solutions:Physical inventory Asset data collection Asset location Site/building/room

ReconciliationMatches Found Report Deletions Report Additions Report


Financial Reporting RequirementsGovernmental Accounting Standards Board Statement 34/35 (GASB

34/35)Generally Accepted Accounting Practices (GAAP)Governmental Accounting, Auditing and Financial Reporting

Requirements (GAAFR)

Solutions:Physical inspectionOriginal cost determination of assetsBarcode taggingDepreciation reportsStraight-line methodFirst-of-the-month (full month) convention

Reconcile to fixed asset ledgerUseful life development


Understanding Fixed Assets – Property IncludedBuildings

Infrastructure

Computer equipment

Computer software

Furniture and fixtures

Machinery

Intangible assets

Land

Leasehold improvements

vehicles


Operational Accounting for Assets

Tangible & intangible assets acquired for use in operations that will benefit more than a single fiscal period

Capitalization threshold usually $5,000…could be more not less (GASB34)

Many variables…depends on situation…funding


Operational Accounting for AssetsCapital Asset Types

Land – 6100

Improvements to land – 6170

Buildings & improvements – 6200

Equipment, vehicles, machinery, & equipment – 6400

Equipment Replacement – 6500


Operational Accounting for AssetsLand - 6100


All expenditures to acquire land & to ready it for its intended use

Professional fees: title searches, architect, legal, engineering, appraisal, surveying, environmental assessments, etc

Inexhaustible life…thus not depreciable

Dirt work

Operational Accounting for AssetsLand Improvement – 6170

Attachments to the land that have limited lives

Recorded separately & are depreciable


Operational Accounting for AssetsLand Improvement – examples

Fencing & gates

Parking lots & driveways

Recreation areas, athletic fields & bleachers

Swimming pools & tennis courts

Retaining walls & lighting systems


Operational Accounting for AssetsBuilding & Improvement – 6200

Structure…permanently attached to the land

Has a roof

Partially or completely enclosed by walls


Operational Accounting for AssetsBuilding & Improvement – guidelines

Materially extends the useful life of building

Capitalized as a sub‐asset of the building

An additional value to the existing building

Improvement meets the capitalization threshold


Operational Accounting for AssetsBuilding & Improvement – examples

Major projects that increases utility & useful life of the building

Adding new classroom/offices to existing building

Cost of converting an old storage room to a usable classroom/office

Installation of a new HVAC…not replacement

Installing data wiring

Technology upgrade (Chromebooks)…bond funds


Operational Accounting for AssetsBuilding & Improvement – guidelines

Repair to original utility level is not capitalized

Roof replacement

Window covering

Painting a whole school/building

Replacement of siding


Operational Accounting for AssetsEquipment – 6400

Vehicles & Equipment

Intangible assets…software purchase & implementation cost

Lease to own

Vehicle replacement – 6500


EC Code 35168 vs. GASB Statement No. 34 – what’s the difference?

The Ed Code section 35168 requires maintenance of inventory for assets

Specific threshold for the assets ($500)

These are the assets that can ‘grow legs and walk away’



GASB Statement No. 34 is a ‘reporting requirement’

Generally, this requirement is addressed when the auditors are on their way

There isn’t always a person ‘dedicated’ to the ongoing maintenance of this task

A regular ‘updating’ of the capital assets system by an appraiser is not evident

Auditors are required to verify beginning balances for new clients

Districts should maintain the capital assets system, not the auditors

Always reconcile your capital asset balance to the audit report



Failure to include capital assets (from debt proceeds) can effect your ‘net position’

The District issues a General Obligation Bond for $100 million

Land purchased for $30 million

School site constructed for $65 million

Furniture and equipment purchased for $5 million (most of the items fall below the Districts capital assets threshold of $5,000)

Failure to capitalize the furniture and equipment results in capital assets of $95 million, debt of $100 million, and a deficit net position of $<5 million>


Other issues that auditors find with Capital Assets


From this report from the SACs GASB 34 software, we reconcile what your capital asset additions should be based on your activity

LandLand improvementsBuildingsFurniture and equipment

Other issues that auditors find with Capital AssetsWhat’s not included in the capital assets

Capital leases entered into during the year

Debit to equipment, credit to proceeds from the disposal of capital assets

Component unit activity

Financing activity such as community facility districts (CFD)

Donated assets

Market value

Erate

Where is the work in progress?

Make certain to maintain this by project

Are deferred maintenance projects considered capital assets?

Does it extend the useful life


QUESTIONS?

Thank you for coming!


SESSION ID: ACT20 FIXED ASSET ACCOUNTING OVERVIEW · 2017-04-19 · SESSION ID: ACT20 FIXED ASSET...

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Transcript of SESSION ID: ACT20 FIXED ASSET ACCOUNTING OVERVIEW · 2017-04-19 · SESSION ID: ACT20 FIXED ASSET...