FIXED ASSETS INTRODUCTION

Transcription

1 FIXED ASSETS INTRODUCTION 1. This chapter outlines the policy and procedures for the accounting and control of NPP fixed assets including capital expenditures, consumable sports and physical fitness equipment, and the depreciation of fixed assets. For procedures specific to ABACIS, see the ABACIS Applications Manual, Chapter The chapter is divided into seven sections as follows: a. General; b. Acquisition; c. Amortization; d. Verification; e. Disposal of Property; f. Casualty Losses g. Use of Employer Owned Motor Vehicle 3. Expenditures of $1,000 or more for the acquisition of assets (e.g. furniture, equipment, buildings, etc) or $2,000 or more, for the cost of repairs and renovations, that will extend their useful life, are to be charged to a fixed asset account and amortized. When such expenditures are less than these amounts, they are non-capital (operating) expenditures and are expensed directly to an appropriate expense account of the procuring entity. Expenditures used to maintain assets at their original condition are ongoing maintenance and are expensed. Some non-capital expenditures, such as for consumable sports equipment, are expensed; however, they are recorded in a fixed asset account for control purposes. 4. The acquisition cost of a fixed asset includes all expenditures incurred to make that asset operational or useable (e.g. item cost, interest incurred, transportation cost and installation cost). Acquisition cost does not include amount expended for taxes. CLASSIFICATION 5. NPF property may be recorded in fixed asset (FA) accounts or classes as follows: 28-1

2 a. Class 1. This includes all road-licensed vehicles such as automobiles, trucks, etc. (i.e. excludes golf carts, lawnmowers, tractors, etc that are not driven on public roads and, therefore, are not licensed); b. Class 2. This includes fixed assets (FA) that are not included in any other class. It also includes electronic cash registers and automated/electronic liquor dispensers; c. Class 3. This includes all computer hardware and software, excluding POS systems. When hardware/ software is purchased as a system (set), and the system cost is $1,000 or more, the individual components (e.g. CPU, monitor, keyboard, printer, etc) should be recorded in separate F&E records with the serial numbers and actual/estimated component costs. In this case, items may be depreciated even though the component cost was less than $1,000. When items are purchased separately at a cost less than $1,000, they are to be expensed but will normally be considered as "attractive" items and recorded as Class 3 assets at a nil book value; d. Class 4. This Includes Point of Sale (POS) (including associated printers, scales, scanners, etc) equipment; e. Class 5. This includes all items on loan or lease from other messes or other organizations. They will be carried at a nil book value; f. Class 6. This includes all items that have a relatively short useful life, including expendable items of sports and recreational equipment, which the B Admin O deems necessary to control (e.g. crockery, glassware, etc). These items will have a nil book value; g. Class 7. This includes all memorabilia, works of art, etc that are not likely to be disposed of. These items are accounted for at their fair market value (FMV) at the time of acquisition; h. Class 10. This includes all non-standard assets. The inclusion of an asset in this class requires the express approval of CFPSA/CFO. The classification is intended to provide for depreciation of unique fixed assets that are inadequately served by the depreciation rates in other asset classifications. There is no standard depreciation rate for Class 10. CFPSA/ CFO will advise the appropriate rate to be applied; i. Class 11. This includes items for which rental revenue is received (e.g. videotapes); j. Class 12. This includes buildings owned by NPF and the capitalized cost of renovations to them; 28-2

3 k. Class 13. This includes all land owned by NPF; l. Class 14. This includes facilities and works other than buildings. (e.g. outdoor pools, golf course irrigation systems, parking lots, tennis courts, etc); m. Class 15. This includes leasehold betterments (i.e. renovations costing more than $2,000 that extend the useful life of the asset and that are funded from non-public funds but made to a fixed asset not owned by NPF). AMORTIZATION RATES 6. The amortization (depreciation) rates for fixed assets are as follows: a. Class 1-2% of the original cost per month; b. Class 2-1% of the original cost per month; c. Class 3-2% of the original cost per month; d. Class 4 1.4% of the original cost per month; e. Class 5 - nil; f. Class 6 - nil; g. Class 7 - nil; h. Class 10 - as advised by CFPSA/CFO; i. Class 11 - The amortization expense is recorded as purchases expense in Department 17 with the offsetting entry to accumulated depreciation. The amortization should be based on expected life not revenues; j. Class 12-5/12 of 1% of original cost per month (5% per year); k. Class 13 - nil; l. Class 14-3/4 of 1% of the original cost per month (9% per year); and m. Class 15-3/4 of 1% of the original cost per month (9% per year). 7. Amortization of items other than FA (e.g. prepaid expenses, unearned revenue such as prepaid mess dues, intra-base loans, etc) at variable rates may also be amortized using the following classes in the ABACIS FA module: 28-3

4 a. Class 51 - Prepaid Expense Not required as of August Replaced by SUIREG program; b. Class 52 Amortization 2; c. Class 53 Amortization 3; d. Class 54 Amortization 4; and e. Class 55 Amortization 5. RECORDS AND FORMS 8. The following records and forms will be used to record the acquisition of controlled FA and to identify the responsible agencies for this FA: a. Property Inventory Listing. (ABACIS FALIST) FA listings will be prepared by the National Fixed Assets Office (NFAO). NFAO shall retain the original and update it for verification purposes. The Non-Public Funds Accounting Supervisor (NPFAS) shall extract a copy and pass to the Property Inventory Holder who shall be responsible for updating his copy; b. Capital Expenditure Request (CER). (Annex A) The CER serves as the originating manager's request for approval to procure major items and is the source document which, when endorsed by the appropriate approving authority, empowers him to proceed with the acquisition, project or renovation. Other than CANEX, CER s are not required for expenditures under $25,000. CANEX outlets will continue to follow the CER and approval requirements established in CANEX Policy and Procedures Manual. A copy of a CANEX CER is attached as Annex B; c. Expenditure Authority. Although the limitation for the requirement of a CER has been established at $25,000. (other than CANEX), this does not eliminate the expenditure approval authorities currently imposed by Base Commanders or the requirement for proper recording of FA items as per para 3; and d. CFCF Loan Guidelines for CFCF loan repayment terms are outlined in Chapter 10. FA CONTROL IDENTIFICATION NUMBERS (CIN) 9. All FA items shall be identified and controlled through the use of CINs. For ABACIS, the CIN for the FA Record is the UIEOS of the entity plus a 4-digit consecutive number assigned by the NFAO. 28-4

5 10. The Property Inventory Holder shall place the CIN on an inconspicuous part of the item. In the case of items where damage would be caused by numbering or where the article is too small to be numbered (e.g. cutlery), the number will be either recorded at the location of the item(s) or recorded only on the property listing and the Property Record Card. PROPERTY INVENTORY CONTROL 11. An individual shall be appointed by the BComd as the Property Inventory Holder for each area of responsibility. Appointments shall be published in Routine Orders. When both public and NPF FA is in use in the same area, both accounts shall be held by the same person. RESPONSIBILITIES OF PROPERTY INVENTORY HOLDERS 12. Property Inventory Holders shall be responsible for: a. the receipt of items acquired under authority of a CER; b. suitably marking each item held on his property inventory account with the CIN assigned by the NFAO; c. advising the applicable administrative authority and the NPFAS of all particulars of approved disposals effected by sale, donation, transfer/relocation and write-off; d. advising the NPFAS of any change in property inventory holders; and e. maintaining the duplicate copy of the Property Inventory Listing of FA held on his charge. RESPONSIBILITIES OF THE RAM 13. The RAM is responsible for: a. providing advice to the managers in the preparation of business cases leading to the submission of CERs; and b. providing sign-off for CERs that are in excess of $25,000 and for all CERs that require a CFCF loan. RESPONSIBILITIES OF THE NFAO 14. The NFAO shall generally be responsible for: a. creating the appropriate FA records based on the approved CER; 28-5

6 b. allocating a special Function (SF) number to the CER and monitoring CER expenditures against the approved CER limit; c. maintaining a file for each CER containing a copy of the approving minutes and the original approved CER. NPFAS will complete Annex C, NPF CER Expenditure Control Sheet, for recording ongoing transactions and submit to NFAO. For any CER with CFCF loan funding, a copy of all invoices pertaining to the CER must be attached to the NPF CER Expenditure Control Sheet; d. creating new FA records for purchased FA and Class 5 FA acquired through loan or lease; e. maintaining these records including purging, deleting obsolete (sold, written-off) records; f. generating the monthly FA amortization; g. reconciling the subsidiary FA records to the GL control accounts on a monthly basis and retaining the reconciliations for a minimum of one year; h. ensuring that the required verifications have been performed and consumable property boards have been convened; i. providing the required annual FA value lists to CFPSA/Budget/Risk & Services Manager in accordance with Chapter 11; and j. maintaining an FA distribution account (DA) file for each inventory group which contains at least the current property inventory listing, DA handover certificate, memo of DA holder appointment and the latest verification report. RESPONSIBILITIES OF THE NPFAS 15. The NPFAS shall generally be responsible for: a. processing purchase orders and invoices for FA expenditures directly to the appropriate FA class at the time of input and advising the RAM and the NFAO of the acquisition so that FA records can be created/updated. Maintain a record of all invoices paid for the project and record on Annex C, NPF CER Expenditure Control. A copy of each invoice is to be forwarded to NFAO for projects that require CFCF loan funding. b. advising the appropriate Property Inventory Holder of the property listing number; issued by the NFAO 28-6

7 c. ensuring that properly authorized CERs are received for all purchases of fixed assets at established levels. d. ensuring that all attractive items are taken on charge and reported to the NFAO for accountability; e. providing a property inventory listing to the Property Inventory Holder; f. ensuring that all adjustments for discrepancies have been actioned by Property Inventory Holders; g. ensuring that the Property Inventory Records are formally transferred to a new holder on the permanent departure of a Property Inventory Holder, and forwarding information to the NFAO for action. BASE FUND ACTIVITIES 16. Base Fund has three main types of operations for which fixed assets may be purchased. These are: a. Subsidiaries. All fixed assets will be carried on the books of the subsidiary and amortized in the normal manner; b. NPF Trusts. Purchases of fixed assets by NPF activity trusts shall be directly expensed to the trust account for the full amount and controlled in the appropriate class at a nil value; and c. Publicly Funded FA. FA items purchased by NPF operations, which receive public funding, will be actioned by CFO CFCF Management Accountant and charged to the NPF Corporate Account. These items will be reported on the appropriate FA Inventory listings at NIL book value. NON-NPF ACTIVITY TRUSTS 17. Purchases of depreciable fixed assets, by those responsible for a trust account (eg. public grants), shall be, for amortization purposes, treated the same as indicated for Base Fund Trusts. MESSES 18. Amortization in messes may be charged to the mess general account or against specific operations such as the bar, depending on the use of the asset. 28-7

8 CANEX 19. Amortization of CANEX FA shall be expensed against the appropriate outlet. In the case of a multi-outlet facility, such as a shopping mall, amortization shall be allocated to each outlet based on space occupied (including related common areas), except when it is clearly evident that it is applicable only to a specific outlet. ACQUISITION PRIOR TO PURCHASE 20. For purchases that exceed the $1,000 (CANEX only, Annex B) and $25,000 threshold amounts for capitalization, the responsible manager shall prepare a CER (Annex A) in triplicate noting thereon the details of authorization (i.e. mess/organization minute authority) and forward two copies to the appropriate approving authority (see Chapter 3). The triplicate shall be retained on a pending file. 21. When endorsed by the approving authority, the CER shall be forwarded to the NPFAS. 22. The NPFAS shall: a. forward the original CER to the NFAO who will assign a CER number; b. once a CER number has been assigned, forward the duplicate to the Property Inventory Holder; and c. complete the CER Expenditure Control sheet (Annex C) to reflect the approved expenditure limits. 23. The Property Inventory Holder shall retain the duplicate CER on file and purchase the items. ACTION ON RECEIPT OF ITEMS 24. The Property Inventory Holder shall: a. accept delivery and inspect items for damage; b. if items are accepted, acknowledge receipt and record the CER number on the invoice; c. prepare a listing of items received and update property record card (Annex D); d. pass receipted invoice to the NPFAS. 28-8

9 25. The NPFAS shall: a. verify that invoices are within the limits of the approved CER and, if so, enter the data in the appropriate SU record and flag the invoice as an FA. When the invoice exceeds the approved CER limit, notify the RAM, the NFAO and appropriate authorities and do not process for payment; b. record the expenditure on the CER Expenditure Control sheet (Annex C) and forward to the RAM and the NFAO; c. if all purchases on the CER have not been made: (1) return the CER and CER Expenditure Control sheet to the open file awaiting additional invoices; and (2) create a SUIGEN in accordance with Chapter 19 and forward the unposted register, the invoice, and the list of items received to the National Accounts Payable Office (NAPO) for payment; d. if all purchases on the CER have been made: (1) create a SUIGEN in accordance with Chapter 19 and forward the invoice and the list of items received to the NAPO for payment and allocation of the CIN(s); (2) forward the CER and CER Expenditure Control sheet in a completed CER file; to the RAM and NFAO CAPITALIZATION OF PROJECTS NOTE: The NPFAS shall not process invoices for which CERs are required and have not been received or which exceed approved CER limits. The NPFAS will notify the appropriate administrative authority (eg. PMC, Club President, CANEX manager etc), of missing documentation. 26. Where capital projects involve joint funding, only the Base NPF portion is to be capitalized. Therefore, any project expenditures funded from DND public funds, provincial or municipal grants, are not to be capitalized and amortized. A CFCF loan repayable by the base/entity is considered to be base funding. 27. When non-base funds are received for a jointly-funded project, these funds shall be credited to Work in Progress (WIP). The result, when the asset is put into use and the WIP account becomes a fixed asset, is that only the base funded portion is capitalized. 28-9

10 CAPITALIZATION OF BUILDINGS AND RENOVATIONS 28. Capitalization of buildings and renovations shall begin when the asset is put into use. Therefore, even though a facility may not be completed, capitalization and amortization will begin as soon as the activity starts generating revenues (i.e. when the facility opens). The capitalization of a building must not be delayed until such time as all invoices relating to the construction have been received. For CANEX outlets, capitalization will usually commence when the project is 80% complete. 29. If the final cost of a fixed asset that has been put into use is unknown as at the end of the accounting period, the principle of accrual accounting must be applied and an estimate made of the total cost of the asset. The appropriate Fixed Asset account must be debited by the estimated amount, the Work in Progress account must be credited in full and the balance to be credited to an Accrued Liability account. Amortization based on the estimated cost, will start in the month following capitalization. The invoices submitted for payment will be debited to the established Accrued Liability account. Once all invoices have been accounted for, the Accrued Liability account will be closed to the Fixed Asset account. If the actual building cost is significantly different than the estimate previously made, adjustments must be made to the depreciation accounts once the exact cost is known. CAPITAL EXPENDITURES FOR REFURBISHMENT 30. Most renovations and repairs to existing amortized fixed assets are done to maintain the serviceability of the asset at the same level as when it was acquired. Such refurbishment shall not be capitalized but will be expensed against the Repair and Maintenance account of the entity/outlet. However, some renovations (betterments) improve the serviceability of the asset and, if all of the following conditions are satisfied, then it is appropriate to capitalize the renovation (class 12, 14 or 15) by reducing the accumulated amortization of the fixed asset in question: a. the expenditure must exceed $2,000; and b. the expenditure must extend the useful life of the asset beyond the planned replacement date or the implied useful life of the asset as indicated by the amortization rates indicated at paragraph 6. NOTE: Amortization is still calculated on the basis of the original cost of the fixed asset, not the original cost plus the cost of refurbishment. CAPITAL EXPENDITURES INVOLVING BOTH FA AND PROJECTS 31. Capital expenditures which involve both FA (chattels/moveable assets/equipment) and Projects (renovations and/or permanent fixtures) will be handled as follows: 28-10

11 a. the manager of the entity will list the items of FA separately from the project/construction portion of the expenditure; and b. the invoice shall be forwarded to the NPFAS 32. The NPFAS shall complete the procedures at paragraph 25 above. 33. Upon completion of the project, the NFAO will assign CINs to the individual FA items and the total building renovation cost, and create/update the appropriate FA records. The NPFAS will then extract an updated Property Inventory Listing and forward to the Property Inventory Holder. ATTRACTIVE ITEMS COSTING LESS THAN $1, Items that are considered "attractive" and costing less than $1,000 will be expensed and recorded in the appropriate class (i.e. Class 2 or 3) at a nil book value. CONSUMABLE PROPERTY 35. The cost of purchases of consumable property shall be charged directly to the appropriate expense account. For control purposes, these items will be included in Class 6 at a nil cost value. Verification procedures are contained in para DONATED FA 36. When fixed assets are donated to an entity, the manager shall provide the NPFAS with: a. a statement from the donor that the item has been donated "free and clear"; b. a description, including the serial number if applicable, of the item; and c. the value of the item. 37. Normally, the amount capitalized is the total cost of an item which represents the value of the FA to the acquiring entity and includes the amount paid to the supplier plus shipping costs, plus any costs incurred to set up, convert, modify or make the asset operational. However in the case of donations, this total cost does not reflect the true economic value of the item to the entity. Therefore, in these cases, the amount to be capitalized will be the fair market value (FMV). FMV is defined as the amount that would be agreed upon by informed parties dealing at arm s length in an open and unrestricted market. When an actual purchase price (actual FMV) does not exist, as in the case of a donation, an estimated FMV can be determined based on information from local suppliers as to the cost of a used item of similar description, quality and condition based on a fair and reasonable appraisal by a knowledgeable person

12 38. When items are acquired at less than FMV, special accounting action may be required. If the FMV is less than $1,000, the actual costs are expensed. If however, the FMV is $1,000 or more, then the amount to be capitalized in the appropriate FA class for that item will be the estimated FMV. Included in this value should be any nominal amount paid to the selling unit plus any transportation and set up costs. The difference between the FMV and the total amount actually paid will be recorded as a credit to Contributed Capital. 39. For example, a cash register with a FMV of $1,100 is donated to an entity that must pay shipping costs of $150 and repair costs of $200. The accounting entries would be: DR Fixed Assets $1,100 CR Accounts Payable $350 CR Contributed Capital $750 ITEMS ON LOAN 41. When FA are received on loan, the manager shall provide the NPFAS with the following: a. a copy of the loan agreement signed by representatives of both parties; b. a description, including serial numbers where applicable, of the items; and c. the value of the items. 42. The NPFAS shall advise the NFAO who shall add the items to the property records as Class 5 at a nil cost value. The appraised or actual value of the item is to be shown in the Insurance value field for CIP purposes. If NPF is responsible, to insure the item, the RAM is to inform the CFO/Budget/Risk & Manager of the value of the item. LEASED EQUIPMENT 42. Generally, capital lease equipment is not permitted unless specifically authorized by CFPSA/CFO in advance of lease acquisition. Property acquired under a leasing agreement shall be controlled in accordance with the procedures for property on loan. In addition, the NPFAS shall be provided with a copy of the leasing agreement detailing the charges applicable to the leasing arrangement. AMORTIZATION GENERAL 43. Amortization (depreciation) is the allocation of the cost of assets over their useful economic life in a systematic and rational manner. The method used is to apply a fixed 28-12

13 percentage (Amortization Rate) to the cost or acquisition value of the assets for each accounting period. 44. There are a number of steps involved in the routine recording of amortization. These include the original determination of the monthly expense, actioning that expense, adjusting the monthly charges as items are disposed of and additional items acquired, and the year-end balancing of amortization records. 45. The monthly amortization expense is to be calculated at the beginning of the month and, therefore, is based on the fixed assets recorded at the end of the previous month. In effect, a full month of amortization will be expensed for an asset in the month following acquisition. A full month of amortization will also be expensed (if available) during the month of disposal. DETERMINING MONTHLY AMORTIZATION 46. The NFAO will: a. determine the accountable activities/depts, etc., subject to amortization expense; b. determine the cost/acquisition value of the FA in the depreciable classes for each accountable unit; c. apply the amortization rate to the cost value of each class to determine the monthly amortization expense; and d. compute the expired cost of the fixed assets. RECORDING OF MONTHLY CHARGE 47. The NFAO, through the DEPGEN, shall action a General Journal entry to record the monthly amortization expense for each entity/outlet as follows: DR Depreciation Expense - (Outlet) CR Accumulated Amortization (Appropriate Class) (To record amortization for the month of ) 48. Amortization of building and renovations shall begin when the asset is put into use. Therefore, management will use their discretion to inform the local NPF accounting office, in writing, when a project is over 80% completed or the asset is put into use. In this situation, the NFAO will commence amortization based on the amount approved in the Capital Expenditure Request. When the final project amount is known, the NFAO will adjust the fixed asset amount and depreciation

14 FULLY AMORTIZED ASSETS 49. All FA will be amortized to a zero book value. Fully amortized items will remain in their original asset class until disposed of. VERIFICATION CONSUMABLE PROPERTY 50. Each year, during the months of April and October, the BComd shall appoint a board to check the inventory of Consumable Property and identify: a. unserviceable items; b. missing items; and c. any other discrepancies. 51. The completed board report will be passed to the Base Fund committee for approval. Once approved by the committee, the board shall witness the disposal of unserviceable items, complete a certificate of disposal and pass it to the NPFAS. 52. The NPFAS will forward the certificate of disposal and minute authority to the NFAO for preparation of the required JV (JENGEN) and inventory adjustment action. 53. At the CF military college, the School Commandant shall appoint a board to check the inventory of consumable property annually at the end of the academic year. OTHER ASSETS 54. The Property Inventory Record, for other than Consumable Property, for Base Fund and messes shall be independently verified by personnel appointed by the BComd to perform this task. In the case of CANEX, the National Managers will appoint someone from the organization to perform the verification. Verifications will be performed on the change of NPF Property Inventory Holders but no less frequently than every two years. DISPOSAL OF PROPERTY GENERAL 55. Except on disbandment of a unit, or a unit in altered circumstance, in which case CFAO 27-9 shall apply, authority is required to dispose of an asset or liability at less than net book value. Net book value is defined as acquisition cost less accumulated amortization charges, if any. Situations in which disposal authority is appropriate are trade-in, sale, auction, barter, deletion from records as a result of fair wear and tear, and 28-14

15 consumption of an asset by the NPF activity for its own use. Disposal authorities are prescribed in the Chief of The Defence Staff Delegation of Authorities for Financial Administration of Non-Public Property. 56. Disposal of assets shall not take place until the required approval has been given. All details regarding the disposal of property (eg. method of disposal, description of items, etc) shall be recorded in the minutes of the applicable entity. 57. The NPFAS is responsible for confirming minute approval for a write-off, collecting funds from a sale; and forwarding copies of the supporting documentation to the RAM and then on to the NFAO for action. TRADE-IN 58. When an item is traded in towards the purchase of another item, the transaction shall be recorded to reflect both the acquisition of the new asset and the disposal of the old. For example, if an item costing $1,000, with accumulated amortization of $500, is traded in on a new item costing $1,500 less $600 trade in, the entries should be: SALE a. Acquisition (Disbursements Journal) DR Fixed Asset $1,500 CR Loss /(Gain) on Disposal of FA $600 CR Accounts Payable $900 b. Disposal (General Journal) DR Accumulated Amortization $500 DR Loss/(Gain) on Disposal of FA $500 CR Fixed Asset Class $1,000 c. (Cross refer to Disbursements Journal entry on Acquisition) 59. The sale of an NPF asset may be a transfer of that asset to another NPF activity, for any amount including zero or book value, or a sale by sealed bid to a person or non- NPF activity. Sales to non-npf activities are subject to GST/HST and PST. 60. When authority, through approved minutes, has been received for the sale of a fixed asset, the responsible manager shall affect the sale and advise the NPFAS of the items sold and the amount received. Transfers of FA between CANEX entities/outlets will be at the Net Book Value (NBV)

16 61. The NPFAS shall record the sale of the item(s) in the FA Disp Loss/(Gain) GL. 62. The NFAO shall, based on the current FA records, determine the NBV of the FA and calculate the gain or loss on sale and prepare the following JV: DR Accounts Receivable OR DR Bank (to offset the receipt recorded in the CRJ) DR Accumulated Amortization DR/CR Loss/(Gain) on Disposal of FA CR Fixed Asset Class 63. For example, a Class 1 item with an original cost of $1,000 is sold for $300, 36 months after purchase: a. the sale price is $300; b. the Net Book Value is $1,000 minus (2% x $1,000 x 36 months) equals $280; c. the Gain on Sale is $20; and d. Entries - General Journal DR Accounts Receivable $300 DR Accumulated Amortization $720 CR FA Class 1 $1,000 CR Loss/(Gain) on Disposal of FA $20 LOSS 64. Losses of NPF property shall be investigated as required by QR&O and Losses shall be recorded in the minutes of the organization and deletion from property records shall not be effected until those minutes authorizing the write-off are approved

17 65. Upon receipt of the approved minutes, the NFAO shall prepare the following JV: WRITE-OFF DR Accumulated Depreciation (total depreciation to date) DR Loss on Disposal of Fixed Assets (NBV) CR Fixed Assets Class (original cost value). 66. Where items held are deemed to have no further useful life and cannot be sold or traded-in against other purchases, approval for write-off shall be recorded in the minutes of the organization. The minute authority must indicate the means of disposal. Deletion from property records shall not be effected until the minutes containing the write-off authority have been approved and a certificate of disposal has been provided to the NPFAS. The NPFAS shall forward this information to the RAM who shall prepare a JV as for losses above. Write-off authorities are prescribed in the Chief of The Defence Staff Delegation of Authorities for Financial Administration of Non-Public Property. CASUALTY LOSSES 67. Casualty losses are involuntary fixed asset conversions due to a major occurrence such as a fire, flood, earthquake, etc. 68. When such a loss occurs, the accounting records for merchandise purchases, FA, and buildings must be brought up to date. This will involve recording all merchandise receipts, sales and all amortization up to the date of the loss. It will then be necessary to determine the net book value (NBV equals cost less accumulated amortization of the assets that were lost or destroyed. The NBV of the destroyed assets are set up in a balance sheet liability account entitled "Casualty Loss" and any insurance proceeds are credited to this account. The resulting debit or credit is then closed to an extraordinary general revenue/expense account entitled. For example, "Gain/(loss) on Fire" or "Gain/(loss) on Building Collapse", etc. 69. There may be other revenues or expenditures associated with the disposal of fixed assets destroyed or damaged. For example, there may be demolition and wage costs to clear the old building debris or there may be a commission, paid by the insurance company, for selling damaged inventory or FA on their behalf. Such revenues and expenses are to be recorded directly against the Casualty Loss account and will be offset by the insurance proceeds. 70. An example of possible entries associated with casualty losses are detailed at Annex E

18 71. When the new assets are acquired, the normal bookkeeping action is done to record the assets at their acquisition costs. Amortization will be based on these costs. Any improvements to the building at the time of reconstruction and funded from NPF resources, (i.e. not from the insurance proceeds) will also be capitalized as part of the building and depreciated accordingly. USE OF EMPLOYER-OWNED MOTOR VEHICLE 72. The use of an employer-owned motor vehicle is to be strictly used for business purposes. The personal driving of an employer s vehicle is a taxable benefit to the employee. Personal driving is any driving by an employee, or a person related to the employee, for purposes not related to his or her employment. This includes: a. vacation trips; b. driving to conduct personal activities; and c. travel between home and work (even if the employer insists that the employee drives the vehicle home) 73. Canada Revenue Agency does not consider it to be personal driving if the employer requires or allows the employee to travel directly from home to a point of call (such as a employee visiting a customer) other than your place of business to which the employee regularly reports, or to return home from that point. Any benefit received from driving the employer s vehicle for personal use will be included on the employee s T4 slip at the end of each year. 74. The use of an employer-owned motor vehicle is not covered under the NPF Consolidated Insurance Program (CIP) if used for personal use. 75. The PSP Manager, CANEX Manager, or their delegate will be custodians of the keys for each vehicle. When the vehicle is to be used by a representative of an entity, then the individual must provide the PSP Manager, CANEX Manager, or their delegate with the amount of kilometrage currently on the vehicle and the purpose of the use. A kilometrage log is maintained by the PSP Manager, CANEX Manager, or their delegate. A sample of a kilometrage log is provided as Annex F. Upon return, the individual will return the keys and provide the kilometrage on the vehicle. 76. In addition to maintaining a kilometrage log, the PSP Manager, CANEX Manager, or their delegate will maintain a maintenance log of all work performed on the vehicle including fuel purchases, maintenance, and license plate renewals. A sample of a maintenance log is provided as Annex G. 77. The kilometrage and maintenance logs are to be reviewed by the PSP Manager and CANEX Manager on a regular basis to ensure the vehicle is used strictly for 28-18

19 business purposes. Both logs are to be made available as requested by CFPSA Comptroller, internal, and external auditors Annex A - NPP Capital Expenditure Request (Other Than CANEX) Annex B - Capital Expenditue Request (CANEX) Annex C - NPF CER Expenditure Control Annex D - Property Record Card Annex E - Sample Entries for Casualty Losses Annex F - Non-Public Funds Vehicle Kilometrage Register Annex G - Non-Public Funds Vehicle Maintenance Log 28-19