A. Capital Assets Management System
The superintendent, and/or other designated staff, shall:
- Conduct the fixed assets physical count;
- Develop the fixed assets listing;
- Tag fixed assets included in the fixed assets management system;
- Make a recommendation of a computer software program for managing the fixed assets management system;
- Enter the necessary data into the fixed capital assets management system and compile the appropriate reports;
- Develop forms and procedures for maintaining the integrity of the fixed capital assets management system; and,
- Maintain responsibility for an accurate fixed capital assets management system.
B. Determining historical cost
- The historical cost of a capital asset is based on the actual costs expended in making the capital assets serviceable.
- Gifts of capital assets are valued at the estimated fair market value at the addition/acquisition date.
- Fixed assets purchased under a capital lease are valued at historical cost of the
irnet present value of the minimum lease payments on the addition/acquisition date. - The historical cost of capital assets must include capitalized interest.
C. Annual capital assets listing reconciliation
- The superintendent, and/or other designated staff, in conjunction with the capital assets management team, will conduct an annual capital assets physical count to develop the annual capital assets listing in a manner similar to the initial capital assets listing process in B above. At least every three years, someone other than the person in custody of the capital assets in the building/department/room will perform the capital assets physical count for the building/department/room.
- Upon completion of the annual capital assets listing, the capital assets listing is reconciled to the capital assets management system data base.
- Capital assets found to have been excluded from the data base are added to the capital assets management system. The capital assets management system process should be reviewed to prevent future incidents of excluding a capital asset.
- Capital assets unaccounted for are reported to the superintendent who contacts the supervisor of and the individual in charge/control/custody of the capital asset. The individual in charge/control/custody of the capital asset has thirty days to account for the capital asset.
- Capital assets unaccounted for after thirty days are reported to the superintendent for appropriate action and documentation. "Appropriate action" may include discipline, up to and including discharge, and may require the employee/person in charge/control/custody of the capital asset to replace the asset.
- The superintendent is responsible for documenting the reasons each asset was not reconciled to the capital assets management system.
D. Addition/acquisition of capital assets.
- The school district's purchasing policy and administrative regulations must be followed when acquiring capital assets. The school district's policy and administrative regulations must be followed for receiving a gift of capital assets.
- The capital assets addition/acquisition documentation must be completed for each additional capital asset with an addition/acquisition cost of equal to or greater than $3,000. The following information should be collected, if applicable:
a. Name of location-building/department/room;
b. Location-building/department/room code;
c. Balance sheet accounting/class code;
d. Government or BTA program;
e. Addition/acquisition date;
f. Check/purchase order number or gift;
g. Serial/model number;
h. Cost-historical;
i. Fair market value on acquisition date (donated assets only);
j. Estimated useful life;
k. Vendor;
l. Purchasing fund and function;
m. Description of capital asset;
n. Department/person charged with custody;
o. Method of addition/acquisition-purchase, trade, gift etc.
p. Quantity;
q. Replacement cost;
r. Addition/acquisition authorization; and,
s. Function for depreciation. - Capital assets acquired in a month must be entered into the capital assets management system in the same month.
- The actual costs of construction in progress, other than infrastructure, is entered into the capital assets management system in the month in which costs are incurred until the total cost of addition/acquisition is entered. Upon completion of construction, the total costs accumulated over the period of construction are reclassified to buildings.
- Capital assets acquired in a month must be entered into the capital assets management system in the same month.
E. Relocation/transfer of machinery and equipment capital assets.
- A capital assets relocation/transfer documentation must be completed prior to removing machinery and equipment capital assets from their current location. The following information must be collected:
a. Relocation/transfer date;
b. Quantity;
c. Current location-building/department/room code;
d. Name of current location-building/department/room;
e. New location-building/department/room code;
f. Name of new location-building/department/room;
g. Date placed at new location-building/department/room;
h. Department/person charged with custody; and
i. Relocation/transfer authorization. - Capital assets relocated/transferred in a month must be entered into the capital assets management system in the same month.
F. Disposal of capital assets
- A Capital Assets disposal documentation must be completed prior to disposing of real property. The following information must be collected:
a. Disposal date;
b. Quantity;
c. Legal description;
d. Location/Address,
e. Purchaser;
f. Disposal methods for real property trade, sale, stolen, etc.; and;
g. Disposal authorization. - Capital assets disposed of in a month must be entered into the capital assets management system in the same month.
- When assets are sold or disposed of, it is necessary to calculate and report a gain or loss in the statement of activities. The gain/loss is calculated by subtracting the net book value (historical cost less any accumulated amortization) from the net amount realized on the sale or disposal.
G. Lost, damaged or stolen capital assets.
- A Lost, Damaged or Stolen Capital Assets Report must be completed when a capital asset has been lost, damaged or stolen. The following information must be collected:
a. Date of loss, damage or theft;
b. Employee/person discovering;
c. Quantity;
d. Description of capital asset;
e. Location-building/department/room;
f. Description of loss, damage, etc.;
g. Filing of police report-yes or no;
h. Filing of insurance report-yes or no;
i. Sent for repair-yes or no;
j. Date returned from repair;
k. Date returned to location-building/department/room;
l. Department/person charged with custody; and,
m. Authorization. - Capital assets damaged, lost or stolen in a month must be entered into the capital assets management system in the same month.
H. Capital assets reports
- Annual reports for June 30 each year.
a. Capital assets listing including the following items:
1) Balance sheet accounting/class code;
2) Purchasing fund, function and depreciation function;
3) Description of the capital asset;
4) Historical cost or other;
5) Location;
6) Current year depreciation/expense; and
7) Accumulated depreciation/amortization.
b. Capital assets listing by location/building;
c. Capital assets listing by department/employee/person charged with custody; and,
d. Capital assets listing by replacement cost.
NOTE: This sample administrative regulation provides a sample capital asset management system. It is important the administrative regulations adopted by a school district reflect is its actual practice. The school district may choose to employ a service provider to conduct the annual capital assets physical count, annual capital assets listing and to implement a capital assets management system for capital assets required to be capitalized under board policy. Should the board employ a service provider, it is important to have the school attorney review the request for proposals and to draft the service provider contract.
This sample administrative regulation provides for valuing capital assets at historical cost as required by GAAP. This administrative regulation also requires the school district to maintain the replacement value of capital assets. Should the school district decide not to maintain replacement values for its capital assets, the requirement should be deleted from the administrative regulation.
Some school districts in completing their initial capital assets listing consider a room a unit. For example, 25 student desks, one teacher's desk, one teacher's chair, wastebasket, two storage/file cabinets and so forth could be considered a room unit with a value of $35,000. The unit is included as one item on the capital assets listing.
This may be a difficult element of a capital assets management system. Capital assets have a tendency to be moved around and the employees moving them generally do not remember to complete the paperwork or even to inform the superintendent. A quality annual reconciliation process must be done to ensure a valid capital assets listing. Some school districts require a designated person at each building to complete the paperwork upon the disposal of a capital asset. School districts with a local area network can save paperwork by allowing each building to enter the information regarding disposal of capital assets as long as the appropriate checks and balances exist to verify the information.
The school auditor may, at a minimum, require a capital assets listing with the historical or other cost basis and balance sheet accounting/class code for each capital asset in the capital assets listing. It is important for the school district to consult with the district’s auditor prior to determining the school district's requirements for this annual report. The other items listed above are optional unless recommended by the school auditor to meet the school district's needs.
The capital assets listing total dollar amount must equal the amount entered on the school district's Certified Annual Report (CAR). This amount is calculated as follows:
Capital assets listing prior year by balance sheet accounting/class code
+ Additions/Acquisitions by balance sheet accounting/class code
- Disposal by balance sheet accounting/class code
= Capital assets listing current year by balance sheet accounting/class code
The last three reports may be used by school districts for many different purposes. For example, the "capital assets listing by location/building" and “capital assets listing by department/employee/person charged with custody" are used by school districts for the annual capital assets listing reconciliation to compare the actual capital assets in a building or department/room with the information in the capital assets management system.
