BIRCH BAY WATER & SEWER DISTRICT

COMMISSION POLICY

SUBJECT: FIXED ASSETS

Purpose

This policy is established to provide guidelines to ensure adequate stewardship over District resources through control and accountability of assets.

The District operates on a Cash Basis and does not have Capital Assets and Depreciation on the Balance Sheet. The District maintains an Asset system and is required to track assets per State Auditor BARS manual Cash Basis Chapter 3 Capital Assets. The District Asset system is comprised of purchase order detail and a summary Asset list.

The District uses the Asset list to calculate the General Facility Connection charges, control inventory of assets, document condition of asset, and ensure the appropriate levels of insurance on its assets. The District uses the detail in the purchase orders to schedule maintenance, repairs and plan for replacements.

Definitions

Fixed Assets Fixed assets are tangible, non-consumable items including, but not limited to: land, buildings, water lines, lift stations, machinery, equipment and vehicles owned by the District, valued at $5,000 or more with a life expectancy of over one year. The value of the fixed asset includes the purchase price and construction costs, plus sales tax, as well as costs to acquire (shipping and handling), install, secure, and prepare an item for its intended use.

Surplus asset A surplus asset is an asset that was recorded by the District (can be a fixed or attractive asset) and is no longer needed by the District. Examples may include but are not limited to: a lawnmower or vehicle. Examples of surplus attractive assets would include a computer or power tool.

Original cost The sum of all costs necessary in placing an asset into service for the District. Costs can include but are not limited to materials, subcontractors, consultants, attorneys, sales tax and shipping costs.

Attractive Assets Attractive assets are assets valued at $500- $4,999 that are defined as high risk for theft. These are durable assets and not normally consumed within one year. These assets may include items in one or more of the following categories:

  1. Portable and marketable, either alone or as a component unit (example power tool).
  2. Can be utilized for personal gain (example computer).
  3. Are repeatedly reported as lost and/or stolen within the industry and society.

Custody All District employees and officials are equally responsible for the care and proper use of District-owned assets.

Routine Repair or Complete Replacement

Repair: Routine repair and maintenance costs will be expensed as they are incurred and will not be recorded as a cost to the fixed asset. Some examples of this are hydrants, pipe and meter replacements. Since the original value of the system included hydrants, pipe and meters for example, the routine repair and maintenance costs to those pieces won’t be additionally included.

Complete replacement: Occasionally a fixed asset will be completely replaced during a project. When a project is completed that entirely replaces an existing fixed asset (example Headworks) the prior fixed asset will be deleted and replaced with the new fixed asset information.

Recording New Assets

Approval for the purchase of fixed or attractive assets occurs during a Purchase Order. The Purchase order notes if it is a fixed asset, an attractive asset or not an asset type. All assets shall be recorded on asset listings maintained by the District Treasurer. Information included in the asset listing should be Make, Model, Serial Number, Year it was added, Location, Value and Description of asset. The combination of Make, Model, Serial Number constitutes a “unique identifier” for attractive assets. The General Manager will decide if an item is “attractive” if its eligibility doesn’t fit the definition.

Disposal of Surplus Assets

Before a fixed or attractive asset is sold or otherwise disposed of, it must first be determined if the asset had originally been purchased with grant monies. If this is the case, the District must refer to the grant agreement and follow prescribed procedures for disposition. To dispose of a surplus asset, the Board must first declare a fixed or attractive asset surplus before it can be sold, or disposed of in any manner. If the asset is to be sold, it will then be sold in accordance with applicable state law. A list of surplus assets will be forwarded to the Board for a motion to declare them surplus. The list of surplus assets will indicate the unique identifier of each asset, description of asset, year acquired, value when acquired, value now and proposed disposal method.

If the asset is no longer in working order the department manager will complete an Asset Disposition sheet which will be given to the District Treasurer, who shall remove the asset from the asset tracking system and approve the disposal. The department manager, along with one other employee will properly dispose of the asset. These assets require the employee and department manager to witness the proper disposal and no Board motion is needed to declare an asset surplus if it is no longer in working condition or broken as the disposition sheet for assets will reflect it was broken and which two employees disposed of it. Example: replace pipe, hydrants or disposal of broken office equipment.

Lost or Stolen Assets

When suspected or known losses of fixed or small and attractive asset items occur, the employee shall notify their manager. The manager shall notify the General Manager and the District Treasurer, and if it is determined the asset has been stolen, the appropriate authorities shall be notified by the District Treasurer. If the asset is determined to be missing or lost (contractor was using item during a project and now the item is missing) the District Treasurer will attempt to recover the asset by invoicing for the value of the item or its return to the District.

Annual Physical Inventory Plan

The District Treasurer will coordinate physical inventory of the Water and/or Sewer Departments with the Operations’ Manager, and will coordinate inventory of the Administrative Offices with the Assistant General manager (or similarly designated manager). Each Department(s) will be reviewed for both Fixed and Small & Attractive Assets. The following year, the other Department(s) will be reviewed for both Fixed and Small & Attractive Assets.

The Assistant General Manager has custody responsibility for the Location “Administration Building” and the Operations Manager has custody responsibility for all other Locations. The physical inventory sheets will be kept until the State Audit for both years is complete or according to the State of Washington records retention schedule whichever is longer. The sheets will note the following information:

  1. Assets have been physically located and verified.
  2. Missing assets will be noted and explained.
  3. Incorrect and/or incomplete information will be corrected.
  4. Any new items located but not on the list will be added, with proper unique identifiers
  5. Condition of the asset will be noted (good/average/poor)
  6. The inventory results will be presented by the District Treasurer during a Board meeting no later than the following year of the inventory.

Approved: June 28, 2012
Amended: May 14, 2015

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Last Updated:

#759 12-16-2019

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