TCA Best Practices Benchmarking Survey Findings Report

Transcription

1 Benchmarking Survey Findings Report November 2011 Report prepared by: The City of Calgary TCA Program Office

2 Table of Contents Acknowledgements... iii Participating Municipalities... iii Executive Summary... iv Introduction... iv Objectives... iv Survey Overview... iv Survey Methodology and Tool... v Summary of Survey Results... 1 Section A: TCA Governance... 1 Section B: Integration of Asset Management and TCA... 1 Section C: Assets... 3 Fiscal and Asset Reporting Years... 3 In-service Dates for Contributed Assets... 3 Land and Work In Progress (WIP)... 4 Grouped and Discrete Assets... 4 Section D: Topics for Future Research... 4 APPENDIX 1 TCA Survey Responses... 5 Section A: TCA Governance... 6 Section B: Integration of Asset Management and TCA Section C: Assets Fiscal and Asset Reporting years In-service Dates for Contributed Assets Land and Work In Progress (WIP) Grouped and Discrete Assets Section D: Topics for Future Research APPENDIX 2 TCA Best Practices Survey PAGE ii

3 Acknowledgements This project was initiated by The City of Calgary s Tangible Capital Assets Program Team and was generously supported by the Canadian Network of Asset Management (CNAM) executive and membership. Without their support and assistance, this project would not have been possible. Participating Municipalities In total, 47 municipalities and agencies responded to the CNAM TCA survey. While not all respondents provided contact information, CNAM and The City of Calgary would like to acknowledge the following municipalities and agencies who took the time to participate in this project. Alberta City of Calgary City of Edmonton City of Red Deer Strathcona County Utilities British Columbia City of Abbotsford City of Burnaby City of Prince George City of Victoria District of Central Saanich UBC West Vancouver Manitoba City of Brandon City of Winnipeg Nova Scotia Cameron Consulting Incorporated Halifax Regional Municipality Ontario City of Niagara Falls City of Ottawa City of Windsor Niagara Region Region of Peel Region of Waterloo Town of Oakville Quebec City of Montreal Saskatchewan City of Regina Ministry of Municipal Affairs Town of Kindersley PAGE iii

4 Executive Summary Introduction After nearly four years of compliance with PS 3150 and reporting on tangible capital assets (TCAs) in municipal financial statements, The City of Calgary and the Canadian Network of Asset Managers (CNAM) conducted a TCA Best Practices Benchmarking Survey to gather information on TCA best practices amongst Canadian municipalities and agencies in the areas of TCA reporting, policies and procedures and the relationships between asset management and financial systems. The survey gathered responses from operational and finance staff in the CNAM network. Questions in the survey focused on TCA governance, TCA and asset management integration, contributed or donated asset processes and in-service dates, reporting land as work in progress (WIP), discrete/individual assets or grouped/pooled assets, and finally, whether municipalities used an asset reporting year or the financial reporting year. The intended outcomes of the survey were to better understand what Canadian municipalities and agencies are doing when reporting TCAs and to share that information with Canadian municipalities so that they may use these best practices to enhance business processes, increase operational efficiency and facilitate more comprehensive decision-making. Objectives This survey was initiated as a follow up to the 2011 CNAM Annual Conference s Post Conference Workshop on TCA Reporting. The survey was conducted to reach a broad national audience, determine the current state of TCA best practices amongst Canadian municipalities and to begin populating a national repository of TCA research findings. By understanding how municipalities across the country, are reporting TCAs, Canadian municipalities can better benchmark their activities. In the future, more topics can be investigated to foster debate and improve decision-making. Survey Overview The survey was presented in four sections. The first section of the survey focused on TCA Governance and was structured to determine best practices in TCA decision making and document management. The second section of the survey, on the Integration of Asset Management and TCA, was structured to be comparable to the 2010 National Asset Management Working Group (NAMWG) Survey on the linkages between Asset Management and TCA reporting so that changes in this area over time could be assessed. The third section of the survey, which centered on assets, was structured to assess TCA best practices in specific areas of asset reporting, including the use of fiscal or reporting years, the assessment of in-service dates from contributed assets, the use of WIP for Land assets and the practices for grouped/discrete assets. The final section of this survey, Topics for Future Research, provided respondents the opportunity to advise CNAM of additional areas of research/focus that are still needed. PAGE iv

5 Survey Methodology and Tool The survey was distributed by to contacts from previous City of Calgary TCA research and to all CNAM members. Of the 168 municipalities and agencies asked to participate in the survey, 47 filled in the online questionnaire, representing a 28% response rate. However, in some cases more than one representative from a municipality or agency responded to the survey. Survey responses were collected as either multiple choice responses or as free form open ended submissions. The results of all survey questions, along with a summary of the text submissions, have been included in Appendix 1. The survey tool that was selected for this survey was the online SurveyMonkey tool, which allowed for an easily accessible and manageable on-line survey to be conducted. Analyzed survey results from this tool were provided in both Excel and PDF form upon the completion of the survey, and these results were used to complete this report. Disclaimer The results of the survey were received preformatted; the raw survey data was not received. As such, cross-tab analysis of the results could not be completed. In addition, due to the format of the survey results, further detailed analysis was not completed. Some additional limitations in completing detailed analysis of the survey results were that the size of the responding municipality was not asked as a required question, nor was information about the respondent s position or role within the municipality. Other limitations that precluded additional analysis include a non-representative sample of municipalities and organizations reporting on TCAs, and the survey being conducted in which may have not been the best timing as it is over the summer and potential respondents may have been on vacation. However, the response rate of 28% indicates that the survey was viewed as important to complete. PAGE v

6 Summary of Survey Results The following is a summary of key findings, selected results and high level conclusions that have been inferred from the results of the 2011 CNAM TCA Best Practices Benchmarking Survey. The detailed results of the survey have been included in Appendix 1 along with a summary of the supplemental comments that were also collected. For reference, a text version of the survey questionnaire has also been included as Appendix 2. Section A: TCA Governance The first section of this survey was included to ascertain how TCA is governed within Canadian municipalities and organizations. Four questions were asked about different aspects of TCA governance. Amongst the municipalities that responded to the survey: There was no common governance structure. However, 41.0% of municipalities indicated that they had a corporate team coordinating with business unit support, while 35.9% indicated that another group or individual, usually in finance or accounting, who facilitates all reporting. 64.3% of respondents indicated that their Finance groups, in collaboration with other asset management and operational areas, tend to be responsible for making TCA decisions. Their TCA decision-making process included using policy, obtaining Council or elected committee approval, obtaining Finance approval, or using a combination of Finance and other groups in collaboration with areas such as operations, business units, departments, and asset management and planning. 64.1% of respondents indicated that their TCA documents were centrally, or corporately, managed Section B: Integration of Asset Management and TCA In 2010, the National Asset Management Working Group (NAMWG) conducted a survey to determine the Linkages Between Asset Management and Financial Tangible Capital Assets Reporting (PSAB 3150) 1. NAMWG wanted to determine the level of understanding that exists regarding the relationship between the information prepared for the financial reporting of tangible capital assets and current asset management processes ( NAMWG 2011, pg. viii). They found that there was limited understanding, knowledge or awareness within organizations of the TCA financial reporting or asset management planning processes and the relationships between them (NAMWG 2011, pg. x). To create comparable responses, the second section of the 2011 CNAM survey asked five of the same questions as the 2010 NAMWG survey, in order to see if any changes or progress towards TCA and asset 1 Linkages Between Asset Management and Financial Tangible Capital Assets Reporting (PSAB 3150) Survey Results, March 2010, National Asset Management Working Group, (accessed and November 2011) PAGE 1

7 management integration have taken place. For municipalities and agencies that participated in the 2011 CNAM survey, the general results are that: TCA has increased support for asset management within their organization. TCA has allowed most municipalities to establish needs and priorities for both the short and long term. TCA has provided a basis for infrastructure asset management and investment plans. TCA has provided a better context for debate and decisions for infrastructure investments. TCA information has not resulted in increased funding for infrastructure. It would seem that TCA information may contribute to making better asset investment and maintenance decisions, but it has not necessarily translated into increased funding for infrastructure assets. The following chart outlines the differences in responses between the 2010 NAMWG survey and the 2011 CNAM survey. Linkages between Asset Management and TCA Reporting Comparisons between the 2010 NAMWG and 2011 CNAM Surveys Substantially Somewhat Not at all Don t know 1. Has TCA increased support for asset management within your organization? 2. Has TCA allowed your municipality to establish needs and priorities for both the short and long term? 3. Has TCA provided a basis for infrastructure asset management and investment plans? 4. Has TCA provided a better context for debate and decisions for infrastructure investments? 5. Has TCA information resulted in increased funding for infrastructure? % 34.1% 25.5% 54.5% 11.8% 6.8% 37.9% 4.5% 32.4% 4.5% 32.4% 68.2% 32.4% 20.5% 28.4% 6.8% 9.3% 13.6% 42.7% 70.5% 24.0% 15.9% 24.0% 0% 10.5% 13.3% 35.5% 64.4% 18.4% 17.8% 35.5% 4.4% 7.8% 2.3% 23.5% 18.2% 20.3% 63.6% 48.4% 15.9% Based on the responses received to the 2011 CNAM survey it appears that TCA reporting is: Increasing support for asset management within Canadian municipalities. Playing a larger role in establishing both short and long term needs and priorities for municipalities and that the understanding of how TCA information can apply to these tasks is becoming more defined (as noted by the large shift in responses to the somewhat category). Providing more municipalities with a basis for infrastructure asset management and investment plans. In addition, the understanding of how TCA information can apply to these tasks is becoming more defined. Providing a better context for debate and decisions for infrastructure investments and that the applicability of TCA information in these debates and decisions in becoming more defined. PAGE 2

8 Not necessarily translating into increased funding for infrastructure. While most responses to the 2011 CNAM survey were weighed heavily to the somewhat category (with the exception of the last question on infrastructure funding, which was weighed heavily to the not at all category) very few of the 2011 survey respondents selected the don t know category. One possible conclusion to this observation is that while the linkage between Asset Management and TCA may not yet be substantial, it is becoming more defined than it was in 2010 when the NAMWG survey was conducted. Section C: Assets The third section of the 2011 CNAM Survey was included to ascertain how asset reporting within Canadian municipalities and organizations is completed. This section of the survey was divided into four parts with questions about fiscal and asset reporting years, in-service dates for contributed assets, land and work in progress (WIP) and grouped vs. discrete assets. Fiscal and Asset Reporting Years The first part of Section C was included to determine if municipalities across Canada used the calendar/financial year for TCA reporting (Jan. 1 Dec. 31), or whether they used another type of reporting year, such as an asset year (e.g. Oct. 1 Sept. 30). The survey findings showed that most municipalities who responded to the survey use the calendar/financial year for TCA reporting as it aligns with policy and the financial statements and budgets. There were a few municipalities who used an asset reporting year, such as April 1 March 31, and some indicated that they had never considered an asset year but that they would now examine the feasibility of changing to an asset year for reporting. In-service Dates for Contributed Assets The second part of Section C was included to determine which in-service dates other municipalities were using for donated or contributed assets, i.e. assets-which the municipality did not pay for. The survey findings showed that amongst the municipalities who responded, approximately half use the date when the public can use the infrastructure or when revenues can be generated from its use as the in-service date for donated assets. The majority of the remaining respondents either use the date when inspections have been completed with material deficiencies corrected (Construction Completion Certificate) or the date when the maintenance period expires and the municipality takes full ownership of the asset (Final Acceptance Certificate). Other in-service dates that respondents used for donated assets included the date when the municipality takes over the asset, when the asset is substantially complete. The date used often depends on the asset category and the year when the asset was constructed. Among the respondents to this survey, there appears to be no consensus on the in-service date to use for donated assets. PAGE 3

9 Land and Work In Progress (WIP) The third part of Section C was included to determine whether municipalities put land into work in progress (WIP), and if so, when they placed their land in WIP. The survey findings showed that 66.7% of respondents do put land in WIP. Some of the respondents indicated that they put land in WIP when the land is located underneath an asset that is under construction (e.g. under a road or a roundabout), for an initial purchase when land is acquired for a special project, or when the use for the land is not known. Grouped and Discrete Assets The fourth part of Section C was included to determine whether municipalities or agencies grouped their assets and, if so, how thresholds for grouped assets were applied. The survey findings showed that 90.3% of respondents group some of their assets for TCA reporting. The most commonly grouped assets include: computer hardware, furniture, communication networks and equipment, streetlights, computer software, street furniture/fixtures, and road signs. Conversely, parking lots/roads, boats, playfields, playgrounds, traffic signals, and fire equipment tended to be individually reported for TCA purposes amongst the municipalities that responded. The final questions in this part of the survey were related to the use of thresholds for both grouped and individual assets to see what proportion of municipalities use thresholds to guide their TCA reporting. 70% of respondents indicated that thresholds were used for grouped/pooled assets and 30% indicated that thresholds were not used for grouped assets. In addition, 79.3% of respondents indicated that thresholds were also used for discrete/individual assets, however the remaining 21.7% of respondents indicated that thresholds were not used for discrete/individual assets. Some of the comments indicated that the use of thresholds was mandated in TCA Policy, thresholds were used to minimize reporting details and resources spent on TCA Reporting and that threshold were used for simplicity and materiality. Section D: Topics for Future Research The fourth and final section of the 2011 CNAM Survey was included in order to provide Canadian municipalities and organizations the opportunity to comment on and recommend additional topics for future research in the area of TCA reporting. Topics for further research that were suggested include: Reporting on asset condition and the development of (standard) replacement costs Determining naming conventions for TCA s and which assets to pool Transferring capital expenditures from operating to capital (budget and actual transfers) The obstacles for TCA and asset management integration, and how those obstacles could be overcome The standard measures for levels of service amongst municipalities PAGE 4

10 APPENDIX 1 TCA Survey Responses PAGE 5

11 Section A: TCA Governance Section A of the survey asked questions about the structure of TCA Governance, TCA decision making and the management of TCA documents. The first question asked What is the structure of your TCA governance?. Conclusion Amongst the respondents, there is no common TCA governance structure. Most municipalities either had a corporate team coordinating TCA with business unit support or another group or individual (e.g. finance or accounting staff) facilitating all reporting. 41% of respondents reported that either a corporate team with business unit support comprised the TCA governance structure. 35.9% responded that another group or individual facilitated all TCA reporting. None of the municipalities reported that they had a permanent TCA office, only 10.3% have an established corporate TCA team and 12.8% had a decentralized model where TCAs were reported by each operating unit. Some municipalities had another form of governance not identified in the question categories. In addition, most respondents indicated in their comments that TCA is either completed or coordinated by their Finance or Accounting departments. PAGE 6

12 The second question in this section asked respondents to share their organizational charts. While 8 responses to this question were received, these have not been included in this findings report due to FOIP regulations and the fact that survey respondents were not asked as part of the survey to consent to share these submissions in this report. The third question asked, Who is responsible for making TCA decisions?. Conclusion Finance, in collaboration with other asset management and operational areas, tends to be responsible for making TCA decisions according to respondents who answered this question. 64.3% of the 42 respondents who answered this question indicated that Finance is responsible for making TCA decisions. Operations was responsible for making TCA decisions for 35.7% of respondents and a TCA governance group representing finance, asset management and operational areas was in place for 26.2% respondents. Only 16.7% of respondents indicated that TCA working groups were responsible for making TCA decisions. Supplemental comments included a combination of collaboration between finance and other staff such as the infrastructure planning division or the operating and asset managers. Some comments indicated that decision would depend on the TCA issue. PAGE 7

13 The fourth question asked municipalities their TCA governance decision-making process. 29 responses to this question were received. Most of the respondents indicated that their decision making process included using policy, obtaining Council or elected committee approval, obtaining Finance approval, or a combination of Finance and other group or individual collaboration, such as operations, business units, departments, asset management and planning. One respondent indicated that the Office of Infrastructure manages TCA governance. The supplemental comments have been summarized by area of responsibility: Policy: Policies and finance Council approves policy which provides guidelines Policy now, and an asset planning division in the future Capital Asset Accounting Policy and Finance and Engineering Finance (or Finance with other groups): Finance Finance, operations and asset management TCA governance group representing corporate accounting and asset management Corporate Accounting with Departments Analytical Support section of Corporate Finance provide guidance on policy Corporate Controller s Division of Corporate Finance with Water and Waste having a stronger decision making role than other units Committee: Committee of elected officials with the help of finance TCA steering committee with policies and procedures TCA team developed guidelines approved by a committee and senior management A governance committee with input from working groups, finance and operations Other: Varies by departments Community Government Council with operational and technical support Office of Infrastructure Section and TCA experts If the project is completed and meets the threshold On an as needed basis Every year PAGE 8

14 The fifth question asked, How are your TCA related documents managed?. Conclusion 64.1% of respondents indicated that their TCA documents were corporately centralized. 25.6% of respondents indicated that document management was the responsibility of every reporting group, and 10.3% indicated that their documents were operationally centralized. Some of the specific comments indicated that the finance or accounting department manages documents at the corporate level, project managers keep detailed records, and the asset register system contains all documentation. A summary of comments is provided below: The system is utilized to attach documents to the asset register for audit purposes The finance department oversees Finance holds/manages the documents in a corporate records system Data is held centrally Operations holds the source documents and Corporate Financial Services Department retains the transaction documents (addition, disposal, transfer/change) Corporately centralized except for Water and Waste department Corporate Accounting holds all records that are audited Project managers have detailed project files and the accounts payable files are corporately centralized. Corporately managed and the data is provided by operations which keeps their detailed records It is the responsibility of each reporting group but they are centrally located The TCA group in finance coordinated corporately with information from each business group We don t have a formal reporting system PAGE 9

15 Section B: Integration of Asset Management and TCA In 2010, the National Asset Management Working Group (NAMWG) conducted a survey to determine the Linkages Between Asset Management and Financial Tangible Capital Assets Reporting (PSAB 3150)" 2. NAMWG wanted to determine the level of understanding that exists regarding the relationship between the information prepared for the financial reporting of tangible capital assets and current asset management processes (NAMWG 2011, pg. viii). They found that there was limited understanding, knowledge or awareness within organizations of the TCA financial reporting or asset management planning processes and the relationships between them (NAMWG 2011, pg. x). The 2011 TCA Best Practices Survey asked five of the same questions as the 2010 NAMWG survey, in order to see if any changes or progress towards TCA and asset management integration have taken place since the NAMWG survey was done. The full results of these five questions from the 2011 CNAM survey are presented in this section of Appendix 1. The comparison of the 2011 CNAM survey and the 2010 NAMWG survey is included in the Executive Summary on page 2 of this report. The first question in Section B (the sixth question overall) asked, Has TCA increased support for asset management within your organization if at all?. Conclusion For most municipalities that participated in this survey, TCA has increased support for asset management within their organization. 88.6% of respondents indicated that TCA increased support for asset management within their organization either somewhat or substantially. 2 Linkages Between Asset Management and Financial Tangible Capital Assets Reporting (PSAB 3150) Survey Results, March 2010, National Asset Management Working Group, (accessed and November 2011) PAGE 10

16 The second question in section B (the seventh question overall) asked, Has TCA allowed your municipality to establish needs and priorities for both the short and long term?. Conclusion Respondents to the survey indicated that TCA has allowed their municipality to establish needs and priorities for both the short and long term. Most respondents indicated that TCA has allowed their municipality to establish needs and priorities for both the short and long term either somewhat (68.2%) or substantially (4.5%). However, 20.5% indicated that TCA has not established needs for the short or long term and a further 6.8% of respondents indicated that they did not know if TCA had helped to establish short and long term needs. PAGE 11

17 The third question in section B (the eighth question overall) asked, Has TCA provided a basis for infrastructure asset management and investment plans?. Conclusion For most municipalities that participated in this survey, TCA has provided a basis for infrastructure asset management and investment plans. The majority of respondents (84.1%) indicated that TCA has either somewhat (70.5%) or substantially (13.6%) provided a basis for infrastructure asset management and investment plans. However, 15.9% indicated that TCA has not provided a basis for infrastructure asset management and investment plans. PAGE 12

18 The fourth question in section B (the ninth question overall) asked respondents, Has TCA provided a better context for debate and decisions for infrastructure investments?. Conclusion For most municipalities that participated in this survey, TCA has provided a better context for debate and decisions for infrastructure investments. 77.7% of respondents either indicated that TCA either somewhat or substantially provided a better context for debate and decisions for infrastructure investments. PAGE 13

19 The fifth question in Section B (the 10 th question overall) asked, Has TCA information resulted in increased funding for infrastructure?. Conclusions For 63.6%of the municipalities that participated in this survey, TCA information has not resulted in increased funding for infrastructure. However, the answers to this question were somewhat varied, with 20.5% of respondents indicating that infrastructure funding has increased either somewhat or substantially. It would seem that TCA information may contribute to making better investment and maintenance decisions for assets, but TCA information has not necessarily translated into increased funding for infrastructure. A comparison of the 2010 NAMWG survey results with the 2011 CNAM survey results on TCA and asset management integration can be found in the table below and within the following analysis. Linkages between Asset Management and TCA Reporting Comparisons between the 2010 NAMWG and 2011 CNAM Surveys Substantially Somewhat Not at all Don t know 1. Has TCA increased support for asset management within your organization? 2. Has TCA allowed your municipality to establish needs and priorities for both the short and long term? 3. Has TCA provided a basis for infrastructure asset management and investment plans? 4. Has TCA provided a better context for debate and decisions for infrastructure investments? 5. Has TCA information resulted in increased funding for infrastructure? % 34.1% 25.5% 54.5% 11.8% 6.8% 37.9% 4.5% 32.4% 4.5% 32.4% 68.2% 32.4% 20.5% 28.4% 6.8% 9.3% 13.6% 42.7% 70.5% 24.0% 15.9% 24.0% 0% 10.5% 13.3% 35.5% 64.4% 18.4% 17.8% 35.5% 4.4% 7.8% 2.3% 23.5% 18.2% 20.3% 63.6% 48.4% 15.9% PAGE 14

20 Question 1 In the 2010 survey by NAMWG, 37.9% of respondents did not know whether TCA has increased support for asset management or not. In the 2011 survey, most respondents indicated that TCA somewhat increased support for asset management within their organization. It appears that TCA is increasing support for asset management within municipalities in Canada, but further research is likely required because the results from both surveys come from different sets of respondents at different times, the CNAM survey is not representative of all municipalities and it may be too soon to see a real trend in this area. Question 2 In 2010, responses were almost equally split between the answer options to the question Has TCA allowed your municipality to establish needs and priorities for both the short and long term?. In 2011, 68.2% of respondents indicated that TCA has somewhat allowed their municipality to establish needs and priorities for both the short and long term, (while 28.4% of respondents said TCA has not helped to establish needs and priorities for their municipality. In 2010, it seems that respondents were unsure whether TCA had allowed their municipality to establish needs and priorities for both the short and long term, whereas in 2011 it seems that responses were mostly grouped into two areas, somewhat and not at all. Again, it may be too soon to tell what role TCA reporting can play in establishing both short and long term needs and priorities for municipalities. Question 3 In 2010, 42.7% of respondents indicated that TCA provided a basis for infrastructure asset management and investment plans, and in 2011, 70.5% of respondents indicated that TCA provided a basis for infrastructure asset management and investment plans. Looking at these results alone, it looks like TCA information provides a basis for infrastructure asset management and investment plans. Question 4 In 2011, 64.4%of respondents indicated that TCA provided a somewhat better context for debate and decisions for infrastructure investments, whereas in 2010 respondents were more likely to indicate somewhat (35.5%) or that they did not know (35.5%). In both 2010 and 2011, there were a small number of municipalities that indicated TCA provided a substantially better context for debate and decisions for infrastructure investments (10.5% in 2010 and 13.3% in 2011). It could be that TCA has provided a better context for debate and decisions for infrastructure investments, but it is likely too soon to draw this conclusion. More evidence with future research on this question is required to confirm a clear trend. Question 5 When asked Has TCA information resulted in increased funding for infrastructure?, 48.4%of respondents in 2010 indicated that they did not know. In 2011, 63.6% of respondents indicated that TCA information did not result in increased funding for infrastructure. It would seem that TCA information may contribute to making better investment and maintenance decisions for assets, but that currently, TCA information has not necessarily translated into increased funding for infrastructure. PAGE 15

21 Section C: Assets Section C of the survey included questions about asset reporting and was structured in four topic areas: Fiscal and Asset Reporting Years, In-service Dates for Contributed Assets, Land and Work In Progress (WIP) and Grouped and Discrete Assets. The first question in section C (the 11 th question overall) asked respondents if they would be willing to share their TCA policy and asset hierarchy. While 10 responses to this question were received, these have not been included in this findings report due to FOIP regulations and the fact that survey respondents were not asked as part of the survey to provide permission to share these submissions in this report. Fiscal and Asset Reporting Years The first part of Section C included questions about the fiscal or asset reporting year to find out if municipalities across Canada used the calendar/financial year for TCA reporting (Jan. 1 Dec. 31), or whether they used another type of year, such as an asset year (e.g., Oct. 1 Sept. 30). The second, question in Section C (the 12 th question overall) asked respondents Do you use the calendar/financial years (e.g. Jan 1-Dec 31) for TCA reporting?. The remainder of the questions in this area asked about considerations of other reporting years and what led to the decision to use fiscal vs. another type of reporting year for TCA purposed. Conclusion Most municipalities who responded to the survey use the calendar/financial year for TCA reporting as it aligns with policy, financial statements and budgets. There were a few municipalities who used an asset reporting year, such as April 1 March 31, and some indicated that they had never considered an asset year but now they would examine the feasibility of changing to an asset year. 91.7% of the 36 respondents use the fiscal/calendar year for TCA reporting, and only a few municipalities that answered this question use another type of year. The supplemental comments show that many of the municipalities have not considered using any other year except the calendar/financial year (Jan. 1 Dec. 31) for TCA reporting for many reasons, including consistency and linkages to the overall financial reporting and PAGE 16

22 budgeting cycles. Some municipalities indicated that it was legislated to use the calendar year, that it wouldn t make sense to use any other year other than Jan. 1 Dec. 31 as their systems for reporting are tied together, or that there was no reason to change reporting timing solely because of TCA. Other municipalities mentioned that they had never considered using an asset year before being asked this question, and that they would now consider and debate whether an asset year rather than a financial year would be beneficial to their organization. Those municipalities that did not use the calendar year for asset reporting have indicated that they use Apr. 1 Mar. 31 as their financial and asset year, which was working well. When asked What led you to choose either the asset year or the financial year for TCA reporting? most respondents indicated policy, consistency with financial statements and budget cycles, ease and timing of reporting, legislation, one computer system used or a corporate decision. Other responses included that a different year had not been considered and the province had established the reporting year for the municipality.. PAGE 17

23 The sixth question in Section C (the 16 th question overall) asked respondents about the benefits and/or detriments experienced as a result of the chosen TCA reporting approach. A summary of responses are provided below. Benefits included: More control and knowledge of assets Simplicity Timely year end reporting Assets are linked to financial health of the municipality Effective use of resources Makes a business case for more resources from decision-makers Improved asset inventory record keeping process Enables seeing the changes in the asset inventory (additions, disposals, corrections) Long term financial planning Increased levels of service for residents Proactive approach to asset maintenance Knowledge of inventory Provides a base for asset management Efficient reporting for compliance Better information for asset value and replacement Knowledge of what we have and can plan for replacement Allows management of assets and maintenance plans Overview of infrastructure spending View of trends of aging assets Detriments included: TCA reporting is aggregated and not as informative for asset management as it could be No incentive to report on asset condition from a finance perspective Difficult to meet deadlines, get all information in on time and being accurate Information is costly to manage and maintain Capital costs with an estimated useful life is not useful to asses state of assets or when the asset needs to be replaced PAGE 18

24 In-service Dates for Contributed Assets The second part of Section C included questions about the in-service dates for contributed/donated assets as well as the process for reporting contributed/donated assets. The seventh question in Section C (the 17 th question overall) asked Which of the following do you use as the in-service date for contributed/donated assets when reporting them for TCA purposes? Conclusion Amongst the municipalities who responded, approximately half (48.1%) use the date that the public can use the infrastructure or when revenues can be generated from its use as the in-service date for donated assets. The remaining responses were evenly split between the date that inspections have been completed with material deficiencies corrected (Construction Completion Certificate) or the date that the maintenance period expires and the municipality takes full ownership of the asset (Final Acceptance Certificate). Other in-service dates for donated assets included the date when the municipality takes over the asset, when the asset is substantially complete, another date depending on the asset category, and the year when the asset was constructed. Other responses included the year the asset was constructed as well as using July 1st of the year the assets reached substantial completion. Based on variability in these responses, there seems to be no consensus on the in-service date to use for donated assets. PAGE 19

25 The eighth question in Section C (the 18 th question overall) asked respondents to briefly describe the process and what information is needed for reporting donated assets for TCA purposes. A summary of responses is provided below. Process comments: Business unit generates lists; pulled to middleware; check by accounting; use fair market value Business units inform accounting of new assets and supplies them with estimated values Agreements require developers to supply schedules of assets and costs; costs and inventories are validated Developers estimates is supplied with quantities; Finance is notified of completion at completion Assets added to municipal inventory at expiry of (developer) agreement Agreements signed with expectation documentation is suitable for TCA purposes Drawings submitted; used to create estimate of project; asset acquisition sheet done at CCC; discrepancies reviewed and adjusted at FAC Estimate of work and agreements with developers prior to start; inspectors report required before assets entered into systems Inventories captured when assets ready for use; cost estimates done by City CCC s collected from planning department; uses blueprints to record assets Use GIS to capture additions Information Comments: Asset description; in-service date; useful life; assigned value Estimated market value Fair value at contribution Donated assets use tax receipt value as the value of the asset or use current benchmarks of existing assets to estimate costs Substantial completion date and in-service date; budgeted amount and actual amount spent Cost (rates from development agreements); quantity (from drawings and with field validation); inservice date (from CCC) GIS date (asset attributes) Quantities form plans; value based on average costs PAGE 20

26 Land and Work In Progress (WIP) The third part of Section C asked questions about the treatment of land for works in progress (WIP) to find out whether or not Canadian municipalities put land into WIP. The ninth question in Section C (the 19 th question overall) asked Do you put land in work in progress?. Conclusion 33.3% of respondents indicated that they do put land in WIP. Respondents that answered yes to placing land in WIP were then asked when they put land into WIP. Some respondents indicated that they put land in WIP when the land is located underneath an asset that is under construction (e.g. under roads), for an initial purchase when land is acquired for a special project, or when the use for the land is unknown. A summary of responses are included below. Land is placed in WIP when: The land is located underneath an asset that is under construction (e.g., under roads, a roundabout) The initial purchase of the land is for a special project The use for the land is not known The project that the land supports is in WIP and it is not used by the public Land is expropriated and all legal actions are finalized. The legal costs are added to the cost of the land. Land is below $100,000 and is part of the cost of the asset such as a road. It is a land improvement. Land value is limited. It is not raw land. PAGE 21

27 Grouped and Discrete Assets The final part in Section C asked questions about the treatment of grouped and/or discrete assets to find out whether municipalities tended to group assets for TCA. The 10 th question in Section C (the 20 th question overall) asked Do you group assets for TCA reporting?. Conclusion 90.3% of the respondents who answered this question group their assets for TCA reporting. As a follow up question, the 11 th question in Section C (the 21 st question overall) asked respondents to identify, from a list of 35 asset types, which assets they group as part of their TCA reporting. Based on the responses (as shown on pages 29-30), over 50% of respondents who answered this question tend to group assets such as computer hardware, furniture, communication networks, streetlights, computer software, street furniture/fixtures, road signs and communications equipment. In addition, the following other assets were identified as grouped assets by some municipalities: Trails, roads, bridges and other road structures Storm catch basins, water mains, sewers Vehicles that fall under our threshold (such as golf carts) Firefighter s personal protection equipment and appurtenances As an additional follow up question, the 12 th question in Section C (the 22 nd question overall) asked respondents to identify from the same list of 35 asset types which assets they report as individual or discrete assets as part of their TCA reporting. Based on the responses as shown in the following pages, more than 30% of respondents tend to report parking lots/roads, boats, playfields, playgrounds, traffic signals, and fire equipment individually (as shown on page 31) Due to the limitation in analyzing the survey data, it is difficult to do a comparison between the responses to these two questions. It was assumed that if an asset class is not grouped these assets should be reported individually and vice versa, however the responses as received do not allow for such a conclusion. PAGE 22

28 PAGE 23

29 PAGE 24

30 PAGE 25

31 PAGE 26

32 The final two questions in Section C (the 23 rd and 24 th questions overall) asked Do you have thresholds for group/pooled assets? and Do you have thresholds for discrete/individual assets?. In asking these questions, it was assumed that Canadian municipalities used thresholds for both grouped and individual assets, however, this assumption needed confirmation. Conclusion 70.0% of respondents indicated that thresholds were used for grouped/pooled assets and 79.3% indicated thresholds were used for discrete/individual assets. The rationale for the thresholds included: thresholds were stated in TCA Policy, to minimize reporting details and resources spent on TCA reporting, and simplicity and PAGE 27

33 materiality. The following summaries of the supplemental comments on thresholds are provided to further quantify the responses to these two questions: What is the rationale behind your threshold for group/pooled assets? Consistency with other municipalities and materiality $100,000 threshold for simplicity and materiality We pool if greater than $100,000 To minimize reporting details and resources required for reporting Assets with a low dollar value per unit but material dollar value as a whole can be captured and capitalized A $5,000 dollar threshold for now but we may modify it It determines criteria for capital verses operating It makes things easier administratively so we can focus on larger value assets Avoids unnecessary work with small dollar assets We used $25,000 as a threshold Threshold was set high to minimize administrative work required The size of the inventory What is the rationale behind your threshold for discrete/individual assets? Consistency with other municipalities and materiality $50,000 threshold has been the threshold for capitalization for many years and it has never changed Differs by assets class To minimize reporting details and resources required for reporting All material assets can be captured and capitalized while time and effort can be saved It makes things easier administratively so we can focus on larger value assets To appropriately capture most assets in each class To segregate small assets from large Materiality Different assets need distinct thresholds Minimizes administrative work $10,000 and $50,000 Size of inventory PAGE 28

34 Section D: Topics for Future Research The last question in the survey (the 25 th question overall) asked respondents if they had additional comments and/or if they could suggest other topics for future research. Topics for further research that were suggested include: Are agencies or municipalities reporting on asset condition? Have replacement costs of assets been developed? How are municipalities determining naming conventions for capitalized assets? How are municipalities determining which assets to pool? The transfer of capital expenditures from operating to capital (budget and actual transfers). What are the obstacles for TCA and asset management integration? and How would those obstacles be overcome? What are the standard measures for levels of service amongst municipalities? Additional comments included: That a formal link between the finance and operations would be beneficial to promote sound asset management practices That the size of the city is important to know for context 3. 3 The authours of this report agree with this comment and acknowledge that this was a limitation of the survey design. PAGE 29

35 APPENDIX 2 TCA Best Practices Survey The following appendix provides a text copy of the survey and a snapshot of the cover screen showing how the TCA Best Practices survey appeared online. The link to this survey is no longer available as the survey has been closed. PAGE 30

36 If you are having trouble reading this , read the online version. Tangible Capital Assets Best Practices Survey The Canadian Network of Asset Managers believes there are significant benefits to Canadian municipalities sharing more Tangible Capital Asset (TCA) information. We invite your participation in CNAM's first TCA Best Practices Benchmarking Survey - please respond by August 10. By completing the short survey below, you will contribute to and be able to access a nationwide repository of TCA research findings valuable information that can be used to establish best practices for Canadian TCA work. This is the first survey of its kind to be conducted, covering both asset management and TCA questions. This is a unique chance to participate in an activity that may help to form the basis for future TCA work at a national level. Link to CNAM TCA Best Practices Survey The responses gathered from this comprehensive survey will give insight into the following important topics across Canada: TCA Governance Deadline Wednesday, August 10, 2011 Questions? Shannon Mitchell The City of Calgary shannon.mitchell@calgary.ca Integration of asset management and TCA Contributed/donated asset in-service dates Treatment of land for works in progress Discreet/individual and grouped/pooled asset categories The use of different asset reporting and financial reporting years A summary of the survey results will be posted on the CNAM website in as well as forwarded to respondents directly. If you would like to unsubscribe from this , please click here. PAGE 31

37 Tangible Capital Asset (TCA) Best Practices Benchmarking Survey Canadian Municipalities Summer 2011 The City of Calgary wants Canadian municipalities to share more TCA information and we need your help! By completing our short survey below, you will contribute to and be able to access a nationwide repository of TCA research findings valuable information that can be used to establish best practices for Canadian TCA work. This is the first survey of its kind to be conducted, covering both asset management and TCA questions. This is a unique chance to participate in an activity that may help to form the basis for future TCA work at a national level! The responses gathered from this comprehensive survey will give insight into the following important topics across Canada: - TCA Governance - Integration of asset management and TCA - Contributed/donated asset in-service dates - Treatment of land for works in progress - Discreet/individual and grouped/pooled asset categories - The use of different asset reporting and financial reporting years A summary of the survey results will be posted on the CNAM website in as well as forwarded to respondents directly. Please answer the below questions to the best of your knowledge? PAGE 32