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HomeMy WebLinkAboutResolution 133-1998 , • , RESOLUTION NO. 133-98 FIXED ASSET AND INVENTORY POLICY WHEREAS, this policy is setting the dollar threshold for equipment considered a fixed asset, and WHEREAS, SDCL 5-24 requires all municipal departments to file an inventory with the Finance Office by January 10�' of each year, now,therefore BE IT RESOLVED that all city departments, with the exception of BMU, Brookings Hospital and Brookview Manor, shall keep an inventory of tangible property. This inventory shall include property under the amount of$1,000.00. Property over$1,000.00 shall be recorded as a fixed asset, and BE IT FURTHER RESOLVED that each department shall record and submit,to the Finance Office, the inventory listing by January 10''' of each calendar year. The list shall include current property with estimated reasonable values, of at least $100.00, or a lesser amount at the discretion of the department head. Passed and approved this 24`� day of November, 1998. R Mayor � ��`.�.��`-� ��.•c��`eoeti�Eo..cs v:.� � M�R.9 i a �`;. 1883 :=� :o ?i;.6,G' � '��Qj. Finance Officer , � . , FIXED ASSESTS WHAT—What is a fixed asset? Could it be a gravel pile, a waste basket or a vehicle? Part of the definition is that it must be tangible in nature(you must be able to touch it) and that it has a useful life greater than a year. Just about all items can be broken into the following categories: Fixed Assets—Fits your capitalization policy Inventory of Supplies—These are consumed during their short life. No Man's Land—Fixed assets that are valued at less than the capitalization policy Infrastructure—Assets that are immovable and are only of value to the city. This could include roads draina e ditches street li hts etc. This is currentl a � g � g � � Y heavily contested topic at national levels). Inventory of Stores Purchased for Resale—Liquor inventories. Capitalization Policy—A policy set by each city that sets a dollar threshold for WHEN to call a piece of equipment a fixed asset. A threshold may also be set for buildings and improvements other than buildings. A sample policy for equipment may say $300 and other items subject to a high risk of accountability as deemed by the finance officer. Personal Property Listings— SDCL 5-24 requires all municipal departments to file an inventory with the finance officer by January 10�'of each year. By law this list should include a11 items over$1,000 in original cost but may include smaller items to coincide with your capitalization policy. wHY —Why keep track of fixed assets at all??? Twenty-nine out of the fifty-nine municipalities audited in 1995 did not have proper fixed asset records. Should they spend the effort to establish their fixed asset records??? Following are a few of the reasons why: Accountability—Tracking fixed assets is a surefire deterrent to theft. Without records, fixed assets could be taken and not detected. Grants—Certain grant programs require the maintenance of fixed asset records. Decision making—When a governing board is adopting their budget they may ask for lists of similar assets to get a feel for quantity or age of an item. Full costing—Are your water rates high enough? How about sewer and liquor? One of the larger expenditures on an enterprise fund's operating statement is depreciation. Depreciation starts with fixed asset records. ' wHE�+ —The following accounts should be used to record fixed assets: 160 Land 162 Buildings 163 Accumulated Depreciation—Improvements to Buildings—enterprise funds only. 164 Improvements Other than Buildings—Water/sewer lines, fences,playground equipment, etc... Not improvements to Building 165 Accumulated Depreciation—Improvements to Buildings—enterprise funds only. 166 Machinery and Equipment—Both furniture and vehicles reported here 167 Accumulated Depreciation—Machinery and Equipment—enterprise funds only 168 Construction Work in Progress—This represents the total of payments made on a project that is not yet complete. 246 Investments in General Fixed Assets—The credit balance or offset to the above accounts for"general" fixed assets. The general fixed assets,representing the assets of general government, are reported in their own separate column. Fixed assets of enterprise funds are reported within each enterprise HOw — How are values established for fixed assets and secondly how do I document these values? Accounting principles indicate that fixed assets should be recorded at original cost or an estimate thereof. Estimated costs should be recorded when it is not feasible to locate the original cost of a fixed asset. Land—Trying locating deeds in safety deposit boxes, vaults, etc... Go to the register of deeds office to obtain copies of deeds. Buildings—Look at the cornerstone to obtain the yeaz the building was built. The to the minutes of that year to secure the bid amounts. Maintenance vs. capitalizing. Capitalize only when useful life is extended and/or dollar amount is significant. Improvements Other Than Buildings—The water/sewer systems will be the hardest to document. I would probably start with a map of the system. Then I would probably use color coding on the map to indicate the size of the lines. Try to obtain years when sections of the town were installed. Research the cost in minutes. Estimate the rest. Equipment/Vehicles—Go back several years securing the original costs of equipment and vehicles. Document these costs obtained by making copies of the purchase invoices. You may go back even further in the minutes to obtain bids of larger vehicles. Photocopy the page of the minutes to document the cost. Estimate the smaller/older items using a committee or other approach. Researching these values is a lot of work, but if it is done right, it only needs to be done once. In many cases you just do not have the time to do the work yourself. To assist in establishing your records consider soliciting the aid of senior citizens,historical societies . and other organizations. You may also hire a college student part-time over the summer to work under you supervision. Fixed asset records may be established by hiring a consulting firm to do the work. Less expensive alternatives consist of volunteers, part-time summer help or just doing the wark yourself. Depreciation—Depreciation is only required to be applied to enterprise fixed assets. The simple approach is always taken in that depreciation is applied using the straight line method. Suggested useful lives of various enterprises are listed in Section XI of the Municipal Accounting Manual. Caution should be exercised, in that assets should not be � depreciated beyond their useful life. Groupings—Groups of common assets may be viewed individually or as a group. For example, if a municipality had 400 chairs at$20 each in an auditorium, I would probably lean towards recording them as a group because they were probably all purchased at the same time AND they will always be in that particular location. Individual chairs in various offices would not need to be grouped together and therefor probably would not be recorded. A computer workstation could include a printer, computer, keyboard, and monitor. If they always going to be in the same grouping, a finance officer could list them together as one item. If your municipality has many computers and swaps pieces back and forth constantly,then you may want to track individual items. Most people have the feeling that computer items should always be tracked. f . � I; , 5-24-1 PUBLIC PROPERTY, PURCHASES AND CONTRACTS ' I 5-24-1. Annual inventory of personal property required of local offi- :� , � i '- � ' cers and employees. County, township, or municipal officers or employees, � '� having in their custody any public personal property, requiring inventory, as � defined in rules issued by the commissioner of the bureau of administxation � i shall annually on the thirty-first day of December,or within ten days thereaf- � ' ter,make in duplicate an inventory of all the public personal property. School ; �Ij.; : employees designated by the school board shall make such inventory in tripli- I '; cate annually on or within ten days after July first and file it as provided in ( ; § 5-24-3. { . i , Source: SL 1903, ch 220, §0 1 to 3; 1913, Cross-References. '� ch 293, Q 1; RC 1919, 0 7048; SDC 1939, Rules and regulations, procedure for adop- ;�' � 48.0501;SL 1961,ch 257; 1970,ch 41; 1975, tion, §§ 1-26-4 to 1-26-14. ' i ' ch 61, � 1; 1977, ch 54, § 1; 1983, ch 36, § 1. Rules enumerating personal property in- � cluded in inventory, § 1-14-12. 1� 'll �' �' ' 5-24-1.1. Inventory of state personal property required. Officers and II ;f ' employees of each state institution and department are required to maintain i ;�; , an inventory of all public personal property in the manner prescribed by rule �' ; by t he commissi o n e r o f t h e b u r e a u o f a d m i n i s t r a t i o n. , ; � I r Source: SL 1977, ch 54, � 2; 1984, ch 30, Collateral References. i���� ; � � qg. O�cers � 111, 112. i ,� 72 Am Jur 2d, States, Territories, and De- _ Cross-References. pendencies, § 66 et seq. i�;�l,� , Board of regents to inventory personalty and 67 CJS, Officers, 4 211 et seq.; 81A CJS, i � , file inventory report, � 13-49-23. States, � 145 et seq. I' i'�fl ! !; , ' 5-24-2. Cost or value to be shown in inventory-Filing.The invento- ries required by §§ 5-24-1 and 5-24-1.1 shall show the actual cost for each I I II�� I'�' item, or the estimated cost at the time of acquisition, if the actual cost cannot � � ; I,;;! '', be ascertained. In the case of gifts,the estimated fair market value at the time '�; ''; of acquisition shall be used. The officer or employee shall retain one copy of I i�l !� the inventory in his office.The others shall be filed,as provided in §§ 5-24-1.1 ;;, and 5-24-3. �„ '''; �e � Source: SL 1903, ch 220, �§ 1 to 3; 1913, � 48.0501; SL 1975, ch 61, fi 2; 1977, ch b4, yi ',,ii ch 293, � 1; RC 1919, � 7048; SDC 1939, § 3; 1983, ch 36, 0 2; 1984, ch 30, # 79• y I �-.,,, ' '�', 5-24-3. Place of filing of duplicate inventories. All off`icers in state„�;;;��� � educational institutions shall file one copy of the annual inventory with the i'�Y`:. al i',' '', , �,, secretary of the board of regents, and one copy with the commissioner of the�, �i ':11! bureau of administration.All county officers and employees shall file one copy �' of the annual inventory with the county auditor. All municipal officers and� �;�;- I� ,'Ii employees shall file one copy of the annual inventory with the city audit0r�.,- � ' �"' finance officer or town clerk of their respective municipalities. All towns�►�p`` i� ''' �''�'� officers and em lo ees shall file one co of the annual inventory with�e � �:, P Y py o�f. clerks of their respective townships.All school employees shall file one copy . �, �, !,':� the annual inventory with the business manager. � i; i i �; 542 i � !; �iil � �� I '' i ,�. ii r �,i . ,� If � � �' CARE AND ACCOUNTING FOR PROPERTY 5-24-7 Source: SL 1903, ch 220, Q§ 1 to 3;'1913, § 48.0501; SL 1975, ch 61, § 3; 1983, ch 36, ch 293, § 1; RC 1919, § 7Q48; SDC 1939, � 3; 1984, ch 30, § 80. 5-24-4. Purchased property to be noted in inventory report. When any personal property is purchased by the state or any county, municipality, township, or school district, to be utilized in pursuance of the duties of the office for which supplied, a note shall at once be made of its purchase and receipt in the inventory report for that year. Source: SL 1913, ch 293, § 6; RC 1919, and changed the term "town" to "third class C 7053;SDC 1939, � 48.0504;SL 1977, ch 54, municipality."Section 2 also substituted "mu- � 4; 1992, ch 60, � 2. nicipality"for"city or town'if the class of the Commission Note. municipality was not specified. The code com- Section 2 of chapter 60 of the 1992 Session mission has implemented this act throughout Laws changed the term "city" to "first class this chapter. . municipality" and "second class municipality" 5-24-5. Lost or destroyed property to be noted in inventory- Date and circumstances shown. Whenever any article in the custody of any such officer or employee is lost or destroyed,he shall make a note of the same in the inventory for the current year, giving the date and circumstances of the loss. Source: SL 1903,ch 220,� 4;1913,ch 293, � 2; RC 1919, # 7049; SDC 1939, # 48.0502. 5-24-6. Civil liability of officer for failure to account for property. In the event of the disposition of any of the personal property above mentioned, by the respective officers, without complying with the requirements of this chapter, such officer shall, in addition to the penal penalty prescribed by law, be liable for the value thereof as shown by the last preceding inventory, to be recovered in a civil suit. Source: SL 1913, ch 293, § 9; RC 1919, 0 7056; SDC 1939, � 48.0506. 5-24-7. Delivery of public property to successor in office- Receipt '� given'by successor.Every officer enumerated in§ 5-24-1,shall turn over all the public personal property in his possession to his successor in office and shall take the receipt of his successor for all property requiring inventory, as defined in rules issued by the commissioner of the bureau of administration, . and shall file such receipts in the offices where he is by this chapter required to file the inventory of the personal property in his possession. . Every officer enumerated in § 5-24-1 shall, upon assuming office, give a receipt to his predecessor for all public personal property requiring inventory, , as defined in rules issued by the commissioner of the bureau of administra- : tion, turned over to him. �. ;' �. � 543 i , . �:. ;:�;:. ;y' . INVENTORY Fund Date Department Purchase Item I. D. � Serial Model Vendor Location Condition Qty Price Total Date Description Number Number Number Name BA/AVG/AA Per Unit Price � . � .