802.4R1 - Fixed Assets Regulation

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.