Fixed Asset Inventory

Transcription

1 Fixed Asset Inventory The purpose of the district-wide fixed asset inventory system is to gather information for the preparation of financial statements, including estimated annual depreciation costs of those assets defined as Capital Assets, and to provide control and accountability of equipment owned by the district. The fixed asset inventory system includes Capital Assets and Accountable Assets. Definitions: A. Capital Asset An item of real or personal property acquired by the district through donation, gift, purchase, capital lease, or self-construction that meets all conditions below: 1. Under normal conditions of use, including reasonable care and maintenance, it has an anticipated useful life of (or extends the useful life of an existing asset by) more than one year. 2. It has a unit cost of $5000 or greater. 3. It is non-expendable; if the article is damaged or parts are lost or worn out, it is more feasible to repair it than to replace it with a new unit. 4. It retains its original shape and appearance. 5. It does not lose its identity through incorporation into a different or more complex unit or object (see Component Unit). The purchase of a Capital Asset is charged as a capital outlay to object 89XX00. Expenditures for repair/rebuild of existing Capital Assets are considered to be capital outlay if all 5 conditions (above) are met. B. Component Unit Include as a capital outlay those items, which are considered part of a single tangible item composed of various components, where the total of all component items meet or exceeds the $5,000 capitalization threshold, and otherwise meet the conditions for a Capital Asset. All expenditures for any capital project (e.g. sewer or drainage project, construction or remodel of a building, or changes in equipment that reduces cost of operation, increase output, or increases useful life) are considered to be Capital Outlay. C. Accountable Item An item which has a unit value of less than $5,000 and is of such a nature as to be placed in inventory for tracking purposes, such as computer equipment that must be tracked on a district-wide basis for warranty purposes, or equipment that is considered small/attractive and subject to loss. Accountable Items are not capitalized, not subject to depreciation, and are not included in the classifications or categories of Capital Assets. Expenditures for Accountable Items are not charged as capital outlay (object 89XX00), but as supplies, using object The two categories of Accountable Items are: Warranty items, such as computer equipment with warranties of 3 or more years, that are tracked district-wide by a single department; Page 1 of 6

2 Small and attractive items, such as cameras or other equipment, that are easily concealed and subject to loss. All equipment under $5,000 that is purchased with Federal grant funds will be considered an accountable item and must be included in the district inventory system regardless of cost. D. Classifications of Capital Assets: Furniture and Equipment The acquisition cost of tangible property other than land, buildings, and improvements, including office equipment, furniture, machine tools, and motor vehicles. Equipment may be attached to a structure for purposes of securing the item; but unless it is permanently attached to or an integral part of the building or structure, it will be classified as equipment and not buildings. Land The value of land owned by the school district. If land is purchased, this account is to include the purchase price and costs such as legal fees and filling and excavation costs that are incurred to put the land in condition for its intended use. If land is acquired by gift, the account reflects its appraised value at time of acquisition. Land does not include depletable resources. Buildings The acquisition and improvement costs of permanent structures owned or held by the district. Such improvements include structures in the form of office buildings, storage quarters, or other facilities and associated items such as loading docks, heating and airconditioning equipment, refrigeration equipment, and all other property permanently attached to or an integral part of the structure. Improvements Other Than Buildings The cost of permanent improvements (other than buildings), which add value to the land. Construction Work in Progress The unit cost of construction work undertaken but not yet completed on capital projects. E. Depreciable Asset A Capital Asset which is subject to depreciation, such as furniture and equipment, buildings, and improvements. Land is not subject to depreciation. F. Capital Project Major construction or acquisition project undertaken by the district, usually through the Capital Projects Fund or Transportation Vehicle Fund. All supplies or services that are part of a capital project are to be included in the total Capital Asset value of the project; e.g., cost of architect s plans, wallboard and nails, initial stock/supply of a new building. G. Capital Leases A capital lease is defined as a lease that transfers substantially all the benefits and risks inherent in the ownership of property to the district. Capital leases are to be accounted for as an acquisition of an asset and the incurrence of a liability. A lease must meet one or more of the following 4 criteria to qualify as a capital lease: 1. By the end of the lease term, ownership of the leased property is transferred to the district. 2. The lease contains a bargain (i.e., less than fair market) purchase option. 3. The lease term is equal to 75% or more of the estimated useful life of the leased property. 4. The item qualifies as a capital lease if, at the inception of the lease, the present value of the minimum lease payments excluding executory costs (usually insurance, maintenance, Page 2 of 6

3 and taxes paid in connection with the leased property, including any profits thereof) is 90% or more of the fair value of the leased property. The interest rate to be used in the computation of the present value will be the current interest rate realized on investments by the fund, which is acquiring the assets. H. Supplies Items that do not meet the above criteria for Capital Assets. Furniture and equipment less than $5,000 that is not included in the district-wide fixed asset system as an Accountable Item may be tracked by the individual sites using different tags and identification numbers from the district-wide system. Responsibility for the Fixed Asset Inventory System Budget administrators have responsibility for maintenance and control of the fixed asset inventory assigned to them. Daily supervision of the inventory may be delegated to one or more persons. Such delegation will not relieve the budget administrator for accountability and control of inventory items. A memo asking for delegation of authority to sign for receiving of fixed asset inventory items and for transfer or modification of fixed asset inventory items is distributed annually by Financial Services. The Director of Financial Services or designee is responsible for the maintenance and control of the inventory system and shall initiate in accordance with law a physical inventory of all sites for all fixed assets. Change in Site Administrators When a change of budget administrator who is responsible for fixed asset inventory occurs, a physical audit of the inventory will be scheduled by the departing budget administrator and approved by his or her administrator. Both the departing and the new administrator (if known) will approve the audit by their signatures and date of audit. The audit and any reconciling records are to be forwarded to the Fixed Asset Accountant. Security for the Fixed Asset Inventory System Access for processing new entries into the fixed asset inventory system will be available to only the Director of Financial Services or designee. Authorization forms (purchase orders, memorandums, or prepared inventory forms) are required for a change in status, quantity, or cost. For administrators having district-wide authority and authorization to change items between sites, an acknowledgment of the receipt of an item in a specific location must be maintained by that location. If verified reports are not returned to the Fixed Asset Accountant within 15 days after the due date, a reminder notice will be sent to the site, through the Director of Financial Services. If verified reports are not returned within 30 days after the due date, a reminder notice will be sent to the site, through the Director of Financial Services and the respective council-level administrator. Page 3 of 6

4 A report will be maintained that will include the date of transaction, along with old information and new information inserted. This report will be distributed to the Director of Financial Services or designee. Physical Inventories A physical inventory procedure has been established which will allow for a complete physical inventory of all district fixed assets on an ongoing cycle. Assets to be Inventoried All Capital Assets and Accountable Assets, as defined above, are to be included in the districtwide fixed asset inventory. Asset Valuation Fixed assets of the district are to be valued according to the following criteria: A. Purchased Assets Valuation of purchased assets is to be made on the basis of the historical costs plus all appropriate ancillary costs (taxes, transportation and original installation). If the historical cost is not practicably determinable, then estimated costs are to be used. B. Donated Assets For those assets acquired by gift, donation or payment of a nominal sum that is not reflective of the asset's true market value, the cost assigned is to be the fair market value at time of acquisition plus all appropriate ancillary costs. Estimated costs are to be used when it is not practical to determine fair market value. C. Self-Constructed Assets -- When a school or department constructs an asset for its own use, the following policy is to govern the asset's valuation: 1. All direct costs associated with the construction are to be included in the asset's value. 2. Indirect costs are to be excluded unless they are increased by the construction. 3. Interest costs are to be excluded from the determination of the asset's value. Identification Policy All inventoried items are to be marked with a unique inventory number by means of an inventory tag. Assets Owned by External Agencies For record keeping and reporting purposes, a distinction must be made between those assets for which the district has title and those for which title remains with an external agency, such as the federal government, although the district has custodial responsibility. While only the value of property to which the district has title is included in the annual financial statements, all property that is inventorial should be included in the equipment inventory system, including equipment on lease or long-term loan. Page 4 of 6

5 Record Requirement and Maintenance A. The superintendent or designee shall be responsible for the support necessary to assist the maintenance and control of fixed asset inventory items. This system shall consist of computer programs and various reports indicating inventory status and activity. B. The computer programs shall provide efficient and complete management of the fixed asset inventory system. The computer programs shall be designed to provide basic district information and to allow a means for locations to identify sub-locations and employees assigned as custodian of the items. C. The computer program shall identify the following data elements: 1. Major Category and Class of Asset 2. Acquisition Information a. Reference to the Source Document (purchase order, construction contract) b. Vendor Number c. Date Acquired (Month/Year) d. Cost (fair market value for items donated) 3. Source of Payment -- This is the fund, program, activity, and object that indicates the revenue source which paid for the asset; allows reconciliation of the subsidiary ledgers with the control accounts in the general ledger 4. Descriptions and Identifiers -- These descriptions should be adequate to isolate particular individual assets of material value and also those of lesser value which are attractive and portable. 5. Location -- The organization unit responsible for the asset. 6. Date, Method, and Authority for Disposition (see Business & Operations Procedures Manual Section7.3 regarding disposal of surplus property). D. The system shall allow for the following optional features: 1. Value Used for insurance purposes and for capital budgeting. This amount should be the cost to replace the asset and periodically updated. 2. Estimated Useful Life 3. Repair Record This record should identify both frequency and repair expenditures to aid in deciding whether to repair or replace an asset. 4. Calculation of accumulated and current year depreciation. Discrepancies and Non-Compliance The adoption of Administrative Rules and Regulations and of Procedures for the Fixed Asset Inventory System is intended to provide a standard for operating and maintaining the system. Non-compliance with these published standards shall be reported to the district's internal auditor. The auditor will evaluate the problem and make recommendations to the administrator responsible for fixed asset inventory. Page 5 of 6

6 In addition, the auditor will prepare a report on the fixed asset system for the superintendent. This report shall consist of an evaluation of the system and include any problems or inconsistencies that continue to have a negative effect on the efficiency or accuracy of information. Recommended corrective action should also be included in the report. This report shall be submitted to the superintendent. Supplemental reports should be submitted to the superintendent to identify emergency issues. Legal References: RCW 28A Superintendent s duties. RCW Records of equipment owned by state Inspection State equipment defined. RCW Inventory of state land resources Developing and maintaining Summaries. RCW Fiscal management Powers and duties of officers and agencies. Former Procedure 7302-P1 Date: Revised: ; Page 6 of 6