NOTE:  This sample administrative regulation provides a "do-it-yourself" process.  The school district may employ a service provider to conduct the initial and annual fixed assets
physical count, initial and annual fixed assets listing and to implement a fixed assets management system for fixed 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.

These sample administrative regulations are a beginning point for the school district in drafting its own administrative regulations.  It is very important the administrative regulations
adopted by a school district reflect its actual practice.

A.    Fixed assets management team.

        1.   The superintendent will appoint a fixed assets management team.  Members of the fixed assets management team will include:

              a.   Superintendent, chair;

              b.   fixed assets manager (buiness manager);

              c.   Building principals;

              d.   Transportation director;

              e.   One or more facility maintenance personnel;

              f.    One or more technology personnel; and 

              g.   Others deemed necessary by the fixed assest manager.

        2.   The superintendent, in conjunction with the fixed assets management team, shall:

              a.   Conduct the fixed assets physical count;

              b.   Develop the fixed assets listing;

              c.   Tag fixed assets included in the fixed assets management system with a bar code identification number; 

              d.   Make a recommendation of a computer software program for managing the fixed assets management system;

              e.   Enter the necessary data into the fixed assets management system and compile the appropriate reports;

              f.    Develop forms and procedures for maintaining the integrity of the fixed assets management system; and

              g.   Maintain responsibility for an accurate fixed assets management system. 

This sample administrative regulation provides for valuing fixed assets at historical cost as required by GAAP.

 

B.     Determining historical cost.

        1.   The historical cost of a fixed assets is based on the actual costs expended in making the fixed assets serviceable.  For the initial fixed assets listing of currently owned fixed
assets, records indicating the actual costs expended in making the fixed assets serviceable may be available in the central administrative office.

        2.   Gifts of fixed assets are given an "historical cost" of the estimated fair market value on the addition/acquisition date. 

        3.   Fixed assets purchased under a capital lease are given an historical cost of their net present value of the minimum lease payments on the addition/acquisition date.

        4.   The historical cost of fixed assets in the proprietary funds must include capitalized interest and infrastructure.

        5.   Fixed assets for which the historical cost cannot be determined.

              a.   Search board minutes to determine the approximate acquisition date, contract approval date or project approval date. 

              b.   Search central administrative office records at the time of the presumed addition/acquisition date, including those in storage, on microfiche or archives, to determine the
actual costs expended in making the fixed assets serviceable.

              c.   If no records can be found to determine the actual costs expended in making the fixed assets serviceable the school district may estimate the historical cost using back
trending/standard costing after consulting with the school auditor.

NOTE:  It is likely school districts will have many fixed assets for which the original paperwork setting out the costs to make the fixed assets serviceable is unavailable.  In these cases,
the historical cost may be estimated using historical resources (e.g., old office supply catalogs) and "back trending."  "Back trending" estimates historical cost based on price levels at the
presumed date of addition/acquisition.  Three publications are available to assist in back trending.  They are:  Means, Marwill and Swift and Boeckh.  These publications are available in
large reference libraries and may be available from the school auditor.  In addition, business managers and board secretaries at their regional meetings and superintendents at their area
superintendent meetings could share costing information about old, but still serviceable fixed assets.  Some information will not be available despite the efforts to obtain it.  It is
important to weigh the benefit of continuing a search for data against the age, value and so forth of the fixed assets as well as the time in personnel costs.  Prior to finalizing an estimated
cost for a fixed asset, it is strongly recommended the school auditor review and approve the estimated cost.     

 

C.     Annual fixed assets listing reconciliation.

        1.   The fixed assets manager, in conjunction with the fixed assets management team, will conduct an annual fixed assets physical count to develop the annual fixed assets listing in
a manner similar to the initial fixed assets listing process in B above.  At least every three years, someone other than the person in custody of the fixed assets in the
building/department/room will perform the fixed assets physical count for the building/department/room.

         2.   Upon completion of the annual fixed assets listing, the fixed assets listing is reconciled to the fixed assets management system data base.

        3.   Fixed assets found to have been excluded from the data base are added to the fixed assets management system.  The fixed assets management system process is reviewed to
prevent future incidents of excluding a fixed asset.

        4.   Fixed assets unaccounted for are reported to the fixed assets manager who contacts the supervisor of and the employee/person in charge/control/custody of the fixed asset.  The
employee/person in charge/control/custody of the fixed asset has thirty days to account for the fixed asset.

        5.   Fixed 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 fixed asset to replace the fixed asset.

6.   The fixed assets manager is responsible for documenting the reasons each fixed asset was not reconciled to the fixed assets management system.

 

D.    Addition/acquisition of machinery and equipment fixed assets. 

        1.   The school district's required purchasing administrative regulations and procedures must be followed to acquire machinery and equipment fixed assets.  The school district's
required administrative regulations and procedures must be followed for receiving a gift of machinery and equipment fixed assets.  

        2.   The Machinery and Equipment fixed assets Addition/Acquisition Form must be completed for each additional machinery and equipment fixed assets with an addition/acquisition
cost of equal to or greater than $5,000.  The following information must be collected

                  a.   Name of location-building/department/room;

                  b.   Location-building/department/room code;

                  c.   Balance sheet accounting/class code;

                  d.   General fixed assets account group or proprietary fund asset (name proprietary fund);

                  e.   Addition/acquisition date;

                  f.    Check/purchase order number or gift;

                  g.   Bar code identification number assigned to and placed on the fixed asset;

                  h.   Serial/model number;

                  i.    Cost-historical;

                  j.    Fair market value on acquisition date (donated fixed assets only);

                  k.   Estimated useful life (for proprietary funds only);

                  l.    Vendor;

                  m.  Purchasing fund;

                  n.   Description of fixed asset;

                  o.   Department/person charged with custody,

                  p.   Method of addition/acquisition-purchase, trade, gift etc.,

                  q.   Quantity; and

                  r.    Addition/acquisition authorization.

         3.    Machinery and equipment fixed assets acquired in a month must be entered into the fixed assets management system in the same month.

 

E.     Addition/acquisition of real property fixed assets. 

        1.   The school district's required purchasing administrative regulations and procedures must be followed to acquire a real property fixed asset.  The school district's required
administrative regulations and procedures must be followed for receiving a gift of a real property fixed asset.  

        2.   The Real Property Fixed Assets Addition/Acquisition Form must be completed for each additional real property fixed asset.  The following information must be collected

                  a.   Addition/acquisition date;

                  b.   Seller;

                  c.   Cost-historical/addition/acquisition, cost including legal, architect, surveying and related   fees;

                  d.   Balance sheet accounting/class code;

                  e.    Fair market value on a requisition date (donated fixed assets only);

                  f.    Estimated useful life of buildings (for proprietary funds only);

                  g.   Legal description,

                  h.   Location/address; and

                  i.    Addition/acquisition authorization.

        3.   For real property fixed assets in the general fixed assets account group, the actual costs of construction in progress, other than infrastructure, is entered into the fixed 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.

         4.   For real property fixed assets in the proprietary funds, the actual costs of construction in progress, including infrastructure construction, is entered into the fixed
                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.

               NOTE:  Only for proprietary funds is infrastructure included in the fixed assets listing. 

        5.   Real property fixed assets acquired in a month must be entered into the fixed assets management system in the same month.

 

F.     Relocation/transfer of machinery and equipment fixed assets.

        1.   A fixed assets Relocation/Transfer Form must be completed prior to removing machinery and equipment fixed assets from their current location.  The following information
must be collected:

                  a.   Relocation/transfer date;

                  b.   Quantity;

                  c.   Bar code identification number;

                  d.   Current location-building/department/room code;

                  e.   Name of current location-building/department/room;

                  f.    New location-building/department/room code;

                  g.   Name of new location-building/department/room;

                  h.   Date placed at new location-building/department/room;

                  i.    Department/person charged with custody; and

                  j.    Relocation/transfer authorization.       

        2.   Machinery and equipment fixed assets relocated/transferred in a month must be entered into the fixed assets management system in the same month.

NOTE:  This is the most difficult element of a fixed assets management system.  Fixed 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/fixed assets manager.  A quality annual reconciliation process must be done to ensure a valid fixed assets
listing.

For school districts maintaining cash basis accounting for proprietary funds, monthly updates to the fixed assets management system should not be posted to the financial records prior to
the end of the year but can be maintained in a separate file.  Monthly updates to the GFAAG will not affect the financial reporting of the non-proprietary funds. 

 

G.    Disposal of machinery and equipment and real property fixed assets.

        1.   A Machinery and Equipment fixed assets Disposal Form must be completed prior to disposing of machinery and equipment fixed assets.  The following information must be
collected:

                  a.   Disposal date;

                  b.   Quantity;

                  c.   Bar code tag identification number;

                  d.   Disposal method-junk, trade, sale, trade-in, etc.; and

                  e.   Disposal authorization.

        2.   A Real Property fixed assets Disposal Form must be completed prior to disposing of real property fixed assets.  The following information must be collected:

              a.   Disposal date;

              b.   Legal description,

              c.   Location/Address;

              d.   Purchaser;

                  e.   Disposal method-trade, sale, stolen, etc.; and

                  f.   Disposal authorization.

        3.   Machinery and equipment/real property fixed assets disposed of in a month must be entered into the fixed assets management system in the same month.

NOTE:  Some school districts require a designated person at each building to complete the paperwork upon the disposal of a fixed asset.  School districts with a local area network can
save paperwork by allowing each building to enter the information regarding disposal of fixed assets as long as the appropriate checks and balances exist to verify the information.   

For school districts maintaining cash basis accounting for proprietary funds, monthly updates to the fixed assets management system should not be posted to the financial records prior to
the end of the year but can be maintained in a separate file.  Monthly updates to the GFAAG will not affect the financial reporting of the non-proprietary funds. 

 

H.    Lost, damaged or stolen machinery and equipment fixed assets.

        1.   A Lost, Damaged or Stolen fixed assets Report must be completed when a fixed assets 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 fixed asset;

                  e.   Bar code tag identification number;

                  f.    Location-building/department/room;

                  g.   Description of loss, damage, etc.;

                  h.   Filing of police report-yes or no;

                  i.    Filing of insurance report-yes or no;

                  j.    Sent for repair-yes or no;

                  k.   Date returned from repair;

                  l.    Date returned to location-building/department/room;

                  m.  Department/person charged with custody; and

                  n.   Authorization.

        2.   Fixed assets damaged, lost or stolen in a month must be entered into the fixed assets management system in the same month.

NOTE:  For school districts maintaining cash basis accounting for proprietary funds, monthly updates to the fixed assets management system should not be posted to the financial records prior to the end of the year but can be maintained in a separate file.  Monthly updates to the GFAAG will not affect the financial reporting of the non-proprietary funds. 

 

I.      Fixed assets reports. 

        1.   Annual reports for June 30 each year.

              a.   fixed assets listing including the following items for the school auditor:

                        (1)     Balance sheet accounting/class code;

                        (2)     Purchasing fund;

                        (3)     Bar code tag identification number;

                        (4)     Description of the fixed asset;

                        (5)     Historical cost; and

                        (6)     Location.

NOTE: The school auditor will at a minimum require a fixed assets listing with the historical cost and balance sheet accounting/class code for each fixed asset in the fixed assets listing.  It is
important for the school district to consult with the school 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 fixed assets listing total dollar amount for the auditor must equal the amount entered on the school district's Certified Annual Report (CAR).  This amount is calculated as follows:

          Fixed 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                      

          =    Fixed assets listing current year by balance sheet accounting/class code

                  b.   fixed assets listing by location/building;

                  c.   fixed assets listing by department/employee/person charged with custody; and

                  d.   fixed assets listing by replacement cost.

 

NOTE:  The last three reports may not be required by the school auditor, but they are used by school districts for many purposes.  For example, the "fixed assets listing by
location/building" and "fixed assets listing by department/ employee/person charged with custody" are used by school districts for the annual fixed assets listing reconciliation to
compare the actual fixed assets in a building or department/room with the information in the fixed assets management system. 

 

Back trending/standard costing - an estimate of the historical original cost using a known average installed cost for like units as of the estimated addition/ acquisition date.  This cost is
only applied to the fixed assets initially counted upon implementation of the fixed assets management system when the historical original cost cannot be determined.  It is inappropriate
to apply the back trending/standard costing method to any fixed assets acquired after the fixed assets management system implementation date.

Balance sheet accounting/class codes - the codes set out for fixed assets in the Iowa Department of Education Uniform Accounting Manual.  They are:  211-sites; 221-site
improvements; 222-accumulated depreciation on site improvements; 231-buildings and building improvements; 232-accumulated depreciation on buildings and building
improvements; 241-machinery and equipment; 242-accumulated depreciation on machinery and equipment, 251-works of art and historical treasures, 252-accumulated depreciation on
works of art and historical treasures, 261-infrastructure, 262-accumulated depreciation on infrastructure, and 271-construction in progress.

Book value - The value of a fixed asset on the records of the school district, which can be the cost or, in the case of fixed assets in the proprietary fund, the cost less the appropriate
allowances, such as depreciation.

Buildings and building improvements - A fixed assets account reflecting the addition/acquisition cost of permanent structures owned or held by a government and the improvements
thereon.

Capital expenditures/expenses - expenditures/expenses resulting in the addition/acquisition of or addition/acquisition to the school district's general or proprietary fixed assets.

Capital fixed assets - fixed assets with a value of equal to or greater than $5,000 based on the historical cost.

Capitalization policy - the criteria used by the school district to determine which fixed assets will be reported as fixed assets on the school district’s financial statements and records.  

Capitalization threshold - dollar limit set for capitalizing fixed assets.

Capitalized interest - interest accrued and reported as part of the cost of the fixed assets during the construction phase of a capital project.  The construction phase extends from the
initiation of pre-construction activities until the time the asset is placed in service. 

Construction in progress - buildings in the process of being constructed other than infrastructure.

Contributed capital - the permanent fund capital of a proprietary fund.  It is created when a residual equity transfer is received by a proprietary fund; a general fixed assets is
"transferred" to a proprietary fund; or a grant received is restricted to a capital acquisition or construction.

Cost - the amount of money or other consideration exchanged for goods or services.

Depreciation - expiration in the service life of fixed assets, other than wasting assets, attributable to wear and tear, deterioration, action of the physical elements, inadequacy and
obsolescence.  In accounting for depreciation, the cost of a fixed asset, less any salvage value, is prorated over the estimated service life of such an asset, and each period is charged
with a portion of such cost.

Fixed assets - long-lived tangible assets obtained or controlled as a result of past transactions, events or circumstances.  Fixed assets include buildings, construction in progress,
improvements other than facilities, land and machinery and equipment.

Fixtures - attachments to buildings that are not intended to be removed and cannot be removed without damage to the buildings.  Those fixtures with a useful life presumed to be as
long as that of the building itself are considered a part of the building.  Other fixtures are classified as machinery and equipment. 

General fixed assets - capital fixed assets that are not fixed assets of any fund, but of the governmental unit as a whole.  Most often these fixed assets arise from the expenditure of the
financial resources of governmental funds.

General fixed assets account group (GFAAG) - a self-balancing group of accounts established to account for fixed assets of the school district, not accounted for through specific
proprietary funds.

Historical (acquisition) cost - the actual costs expended to place a fixed asset into service.  For land and buildings, costs such as legal fees, recording fees, surveying fees, architect fees
and similar fees are included in the historical cost.  For machinery and equipment, costs such as freight and installation fees and similar fees are included in the historical cost.

Improvements other than buildings - attachments or annexation to land that are intended to remain so attached or annexed, such as sidewalks, trees, drives, tunnels, drains and sewers. 
Sidewalks, curbing, sewers and highways are sometimes referred to as "betterments," but the term "improvements" is preferred.

Infrastructure assets - public domain fixed assets such as roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, lighting systems and similar assets that are
immovable and of value only to the governmental unit.

Investment in general fixed assets - an account in the GFAAG representing the school district's investment in general fixed assets. The balance in this account generally is subdivided
according to the source of the monies that finance the fixed assets addition/acquisition, such as general fund revenues and special assessments. 

Land and buildings - real property owned by the school district.

Machinery and equipment - fixed assets which maintain their identity when removed from their location and are not changed materially or consumed immediately (e.g., within one
year) by use.  Machinery and equipment are often divided into specific categories such as:  transportation machinery and equipment which includes school buses and school district
owned automobiles, trucks and vans; other motor machinery and equipment which includes lawn maintenance machinery and equipment, tractors, motorized carts, maintenance
machinery and equipment, etc.; other machinery and equipment which includes furniture and machinery and equipment contained in the buildings whose original cost is equal to or
greater than ($ capitalization threshold), and fixed assets under capital leases and fixed assets being acquired under a lease/purchase agreement.

Proprietary fund fixed assets - capital fixed assets that are fixed assets specific to a proprietary fund, such as school nutrition fund or child care fund.  Most often these fixed assets arise

from the expenditure of financial resources of a proprietary fund.

Replacement cost - the amount of cash or other consideration required today to obtain the same fixed assets or its equivalent.

 

 

Approved     3-18-13                             
Reviewed                                                                               
Revised