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policy:fixed_assets [2013/02/20 21:32]
dustin Updated Fixed Assets 2-14-2013
policy:fixed_assets [2015/08/28 21:57] (current)
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 === Purpose === === Purpose ===
- This policy is established to provide guidelines to ensure adequate stewardship over District resources through control and accountability of capital ​assetsand to collect ​and maintain complete ​and accurate capital ​assets ​information+ 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.
  
-The District operates on a Cash Basis and so does not have Capital Assets and Depreciation on the Balance Sheet. The District does keep a subsidiary Fixed Asset system and is required to track assets. ​ 
  
 === Definitions === === Definitions ===
  ​__Fixed Assets__  ​__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, or the construction costs, plus sales tax, as well as costs to acquire (shipping and handling), install, secure, and prepare an item for its intended use. +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 Districtvalued 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. 
  
-The original purchase of a software program ​is considered a fixed asset if it meets the $5,000 threshold established.  +__Surplus asset__  
-Improvements to an existing ​asset that extends the life of the asset are capitalized ​and depreciated over the remaining useful life of the related asset+A surplus asset is an asset that was recorded by the District (can be a fixed or attractive ​assetand 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 
  
-__Small & Attractive__ +__Original cost__ 
- Assets Small and attractive ​assets are assets valued at less than $5,000 that are defined as high risk for theft. These assets ​are not normally consumed within one year. These assets may include items in one or more of the following categories:  +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. ​  
-  - Portable and marketable, either alone or as a component unit.  + 
-  - Can be utilized for personal gain. +__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:  
 +  - Portable and marketable, either alone or as a component unit (example power tool).  
 +  - Can be utilized for personal gain (example computer)
   - Are repeatedly reported as lost and/or stolen within the industry and society. ​   - Are repeatedly reported as lost and/or stolen within the industry and society. ​
  
-=== Requirements === +__Custody__ 
- The State of Washington Office of State Auditor BARS Manual for Cash Basis entities states, in part: + All District employees and officials are equally responsible for the care and proper use of District-owned assets.  ​
  
-__Capital Asset Tracking System__ (Chapter 7, Section A) a district that owns capital assets must establish and maintain a tracking system for them. 
  
-  - The tracking system must adhere to the formal asset policies approved by the governing body. +=== Routine Repair or Complete Replacement ===
-  - It must contain the following information:​  +
-    - Inventory list containing capital assets owned by the district.  +
-    - Individual information record for each capital asset.  +
-  - Reconciliation of asset records and performance of a physical inventory.  +
-  - Maintain a method with controls over additions and deletions to the capital asset tracking system.  +
-  - Have a method to track changes in custody and assign responsibility for the assets. ​+
  
-=== Capitalization Threshold === +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 hydrantspipe and meters for examplethe routine repair ​and maintenance costs to those pieces won’t be additionally included. ​ 
- All assets with a cost of $5,000 or more shall be capitalized. Although //Small & Attractive Assets// (those costing less than $5,000) do not meet the District’s capitalization threshold, they are considered assets for purposes of marking and identification,​ record-keeping,​ and tracking.  +
-=== Improvement/​Repair/​Maintenance Expenses === +
- Routine repair and maintenance costs will be expensed as they are incurred and will not be capitalized. Major repairs will be capitalized if they result in improvements ​to the District’s capital assets +
-=== Depreciation Method and Expected Useful Life of Assets === +
- All assets ​are depreciated using the straight-line method of depreciationThe District will use the IRS Publication 946 Table of Class Lives and Recovery Periods to determine ​the life of acquired assets. The estimated life of acquired assets is assigned in the following manner:  +
-  * Lift Station Electrical & Mechanical- 20 years  +
-  * Lift Station Structures — 50 years  +
-  * Office Equipment electrical- 5 years  +
-  * Office FurnitureFixtures, and Equipment non-electrical — 10 years  +
-  * Plans & Studies — 5-15 years  +
-  * Reservoir Structures and Improvements — 50 years  +
-  * Shop Tools — 10 years  +
-  * Telemetry/​SCADA — 10 years  +
-  * Treatment Plant Electrical & Mechanical- 20 years  +
-  * Treatment Plant Structures — 50 years  +
-  * Vehicles — 10 years  +
-  * Wastewater Services — 20 years  +
-  * Wastewater Cast Iron, Ductile Iron & Concrete Mains — 50 years  +
-  * Wastewater PVC Mains — 50 years  +
-  * Water Meters — 10 years  +
-  * Water Mains — 50 years  +
-  * Water Hydrants — 40 years  +
-  * Water Pump Equipment- 20 years  +
-  * Water Rights — not depreciated  +
-  * Water Services — 20 years+
  
-=== Revision of Expected Useful Life === +Complete replacement: ​ Occasionally a fixed asset will be completely replaced during a project ​When ​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.
- The District may need to revise the expected useful life of some of the capital assets. If this is the case, the rate should ​be recalculated based on the remaining useful life at the time of the revision, and the new rate should be applied in the present and future accounting periodsNo changes should be made to financial records of previous years for revised estimates.  +
-=== New Assets === +
- All assets fitting descriptions of a fixed asset, or small and attractive asset, shall be recorded on asset listings maintained by the District Treasurer. Information included in the asset listing should ​be Make, Model, Serial Number, ​and like description.  +
-=== Disposal of Surplus Items === +
- ​Before a capital or small and 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+
  
-The Board must __**first**__ declare a capital or small and 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. If the asset is no longer in working order and cannot reasonably be repaired for re-sale, the department manager, along with one other employee will properly dispose of the asset. 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.  +=== Recording New Assets ​===
-=== Lost, Stolen, or Missing Property ​=== +
- When suspected or known losses of capital assets or small and attractive items occur, the department head shall be notified. The department head shall notify the General Manager and the District Treasurer, and if determined the asset has been stolen, the appropriate authorities shall be notified. +
-===Annual Physical Inventory Plan=== +
-The Treasurer will coordinate with the Operations Manager to complete a physical inventory of either the Water or Sewer Departments. ​ Each year one of the Departments will be reviewed for both Fixed and Small & Attractive Assets. ​ The following year, the other Department will be reviewed for both Fixed and Small & Attractive Assets.+
  
-The physical inventory sheets will be kept until the State Audit for both years is complete.  The sheets ​will note the following information:​+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: ​
   - Assets have been physically located and verified.   - Assets have been physically located and verified.
   - Missing assets will be noted and explained.   - Missing assets will be noted and explained.
   - Incorrect and/or incomplete information will be corrected.   - Incorrect and/or incomplete information will be corrected.
-  - Any new items located but not on the list will be added, with proper ​serial numbers, location etc.+  - Any new items located but not on the list will be added, with proper ​unique identifiers 
 +  - Condition of the asset will be noted (good/​average/​poor) 
 +  - 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\\ Approved: June 28, 2012\\
-** Amended:​** ​Feb. 14, 2013+** Amended:​** ​May 14, 2015
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