DUBUQUE FIXED ASSET MANAGEMENT REPORTING AND REVISED AUGUST

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1 CITY OF DUBUQUE ADMINISTRATIVE POLICY POLICY NUMBER 30 SUBJECT FIXED ASSET MANAGEMENT REPORTING AND RECORDS APPROVED BY CITY MANAGER EFFECTIVE DATE ISSUED MARCH REVISED AUGUST PURPOSE The purpose of this Administrative Policy AP is to set forth the City s policy and procedures relating to recording inventory record keeping and management of fixed assets SCOPE This AP applies to all City departments and agencies including boards and commissions RESPONSIBILITY It shall be the responsibility of the department managers to ensure compliance with reporting and inventory of fixed assets It is the responsibility of the Finance Department to maintain records and financial reporting related to fixed assets for the annual external audit and risk management BACKGROUND In the public sector the term fixed assets typically is used to refer to land buildings equipment and improvements other than buildings acquired by a government for use in the provision of goods or services to citizens Effective June the City of Dubuque began reporting fixed assets under the new GASB 34 rules Infrastructure and other assets not previously reported as fixed assets are now required to be booked and depreciated It is incumbent upon publicsector managers to maintain adequate control over all of a government sassets including its fixed assets to minimize the risk of loss or misuse Fixed assets with short useful lives and fixed assets of small monetary value are reported as an expense in the period in which they are acquired Fixed assets that are reported on the balance sheet are said to be capitalized The monetary criterion used to determine whether a given fixed asset should be reported on the balance sheet is

2 Policy Number 30 Fixed Asset Management Reporting and Records Page 2 of 6 known as the capitalization threshold The capitalization threshold for equipment in the City is Higher limits apply to other capital assets Capitalization is of its nature primarily a financial reporting issue The principal concern in establishing the capitalization threshold is to meet information needs of the users of the government sexternal financial reports While it is essential to maintain control over all of a government sfixed assets there exist much more efficient means than capitalization for accomplishing this objective in the case of a government s smaller fixed assets Departments are required to establish or continue systems to control City owned assets at the department level FIXED ASSET CAPITALIZATION POLICY The City policy for capitalizing fixed assets is as follows 1 Fixed assets will be capitalized only if they have an estimated useful life of at least two years following the date of acquisition 2 In most cases fixed asset capitalization thresholds should be applied to individual fixed assets rather than to groups of fixed assets 3 The capitalization threshold for the City of Dubuque is any individual item or system is City departments should exercise control over their noncapitalized fixed assets by establishing and maintaining adequate control procedures at the departmental level GASB 34 IMPLEMENATION AND POLICIES Infrastructure Infrastructure refers to streets and sidewalks airport taxi and runways bridges retaining walls stairwells and stormwater The City policy for infrastructure is as follows Airport 1 Existing airport runways and taxiways as of June were valued at the reimbursement costs submitted to and approved by the FAA Federal Grant Program 3 The capitalization threshold for airport infrastructure projects is Runways and taxiways are assumed a twenty 20 year life with 20 salvage value

3 Policy Number 30 Fixed Asset Management Reporting and Records Page 3 of 6 Bridges 1 Existing bridges as of June were valued at historical cost based on council records or estimates made by the engineering staff 3 The capitalization threshold for bridge projects is Bridges will have an assumed 75 year life with no salvage value Floodwall 1 The City floodwall was valued at historical costs based on council records 2 The floodwall is considered land improvement No depreciation applied Retaining Walls 1 Three existing retaining walls were added as infrastructure as of June Initial criteria to classify retaining walls as infrastructure required that the project was completed since 1980 with a project cost of at least Initial value was established at historical cost using council records or estimate provided by engineering department 3 The capitalization threshold for retaining wall projects is Retaining walls are assumed to have a 75 year life Steps 1 One existing stairwell was included as infrastructure as of June Initial criteria to classify steps as infrastructure required that the project was completed since 1980 with a project cost of at least The value was established at historical costs using council records 3 The capitalization threshold for stairwell projects is Stairwells are assumed to have a 50 year life with no salvage value Stormwater 1 Stormwater assets existing prior to June were valued as a group computed at historical cost using basic year and construction type based on GIS data base of streets 2 Current stormwater projects are valued through CIP project totals when completed and council accepted or the year when a street is dedicated to the City 3 Stormwater projects are an enterprise asset 4 Dedicated stormwater assets are valued using 35 of the street length times the City s current year average cost for stormwater construction 5 The capitalization threshold for all new and replacement stormwater projects is Stormwater is assumed a 75 year life with no salvage value

4 Policy Number 30 Fixed Asset Management Reporting and Records Page 4 of 6 7 No fixed asset adjustment is made for removal of old pipe as the value of the old pipe cannot be determined Streets 1 Street assets existing prior to June were valued as a group computed at historical cost using basic year and construction type based on the GIS data base of streets 2 Current street projects are valued through CIP project totals when completed and council accepted or the year when a street is dedicated to the City 3 Curb sidewalks and lighting are included in the project cost for new streets 4 Concrete streets are assumed a 75 year life and asphalt streets as assumed a 60 year life 5 All streets have an assumed 20 salvage value for initial grading and preparation work 6 Overlays to existing streets are always expensed regardless of project cost 7 Stormwater and sanitary sewer costs associated with a street project are identified by engineering department and capitalized separately from street cost Library Collection Effective June the City of Dubuque began reporting the value of the library books periodicals references and video and audio collections as a total under the GASB 34 rules The policy for capitalization of the library collection is as follows 1 The initial value of the library collection prior to June was determined by an adjusted inventory count prepared by the Library staff for the December for the Public Library General Information Survey An average cost was applied using an adjusted valuation from the 2001 Bowker Annual Library Book Trade Information 2 Future additions and retirements to the library collection are based on the Library s annual count and valued as follows a Additions to the library collection will be based on total of actual purchases for the current year b Retirements are valued using an average costing basis for the entire collection 3 A 10 year life is used for the library collection with no salvage value Works of Art and Historical Treasurers Under GASB 34 rules the City will not report works of art of historical treasures as fixed assets Governments are not required to capitalize these collections if the following criteria are met 1 The collection is held for exhibition education or research in furtherance of public service rather than financial gain 2 The collection is protected kept unencumbered cared for and preserved 3 The collection is subject to an organizational policy that requires the proceeds from the sale of the collection to be used to acquire other items for collection

Policy Number 30 Fixed Asset Management Reporting and Records Page 5 of 6 RECORDKEEPING POLICY FOR FIXED ASSETS There are six types of transactions that will affect fixed asset inventories purchases

5 Policy Number 30 Fixed Asset Management Reporting and Records Page 5 of 6 RECORDKEEPING POLICY FOR FIXED ASSETS There are six types of transactions that will affect fixed asset inventories purchases tradeins inter department transfers scrapping sales and capital improvement projects The source information for purchases and trade ins is a Purchase Order Information regarding inter department transfers scrapping or sale of an asset is taken from the Fixed Asset Transaction form submitted to Finance by the department initiating the transaction It is important that the Fixed Asset Transaction forms and Purchase Orders are completed properly to reflect accurate inventories Disposition of a Capital Improvement Project is obtained through discussions between Finance and Department Managers The following procedures are to be followed when a fixed asset is involved in a transaction Keep the attached Fixed Asset Transaction form as the original copy and make copies as needed The form can also be found on the Publicln drive under Finance FormsFixed Asset Transaction Form doc 1 ISSUING A PURCHASE ORDER FOR A NEW OR USED FIXED ASSET A complete description of the purchased asset the quantity and the price per unit must be stated clearly on the face of the purchase order A vendor s part number or item number does not qualify as an asset description 2 ISSUING A PURCHASE ORDER FOR A NEW OR USED FIXED ASSET WITH TRADEIN A complete description of the purchased asset the quantity and the price per unit must be stated clearly on the face of the purchase order A vendor s part number or item number does not qualify as an asset description The trade in must be stated clearly on the face of the purchase order Include a complete description of the fixed assets to be traded a vehicle and serial number if applicable and the dollar amount accepted for the tradein 3 TRANSFERRING A FIXED ASSET TO ANOTHER CITY DEPARTMENT DIVISION The department receiving the transferred fixed asset must complete the Fixed Asset Transaction form as indicated and forward to the Purchasing Coordinator 4 SCRAPPING A FIXED ASSET Complete the Fixed Asset Transaction form as indicated and forward to the Purchasing Coordinator The reason for and method of scrapping the asset must be stated on the form along with the dollar amount received for scrapping the asset 5 SELLING A FIXED ASSET Complete the Fixed Asset Transaction form as indicated and forward to Purchasing Coordinator The reason for selling the asset must be stated on the form along with the dollar amount received for selling the asset

6 Policy Number 30 Fixed Asset Management Reporting and Records Page 6of6 QUESTIONS Contact the City Purchasing Coordinator or Finance Director with any questions on capitalization of fixed assets and proper transaction procedures MiEhael Van Milligen City Manager

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