Fixed Asset Capitalization Policy 06-22-1998-8m

Browse Search

ORANGE COUNTY BOARD OF COMMISSIONERS Adion Agenda Item No. ~~ ACTION AGENDA ITEM ABSTRACT Meeting Date: June 22, 1998 SUBJECT: Fixed Asset Capitalization Policy DEPARTMENT: PURCHASING AND Public Hearing: No CENTRAL SERVICES Budget Amendment Reqd? No ATTACHMENT(S): Proposed policy INFORMATION CONTACT: Ken Chavious, ext 2450 Pam Jones, ext. 2650 Telephone Number- Hillsborough 732-8181 Chapel Hill 967-9251 Mebane 227-2031 Durham 688-7331 PURPOSE: To consider adoption of a policy regarding the valuation of fixed assets for accounting purposes. BACKGROUND: Both the Local Govemment Commission (LGC) and the Govemment Finance Officer's Association (GFOA) recommend that governmental entities have formal policies in place to provide accountability for fixed assets. It is further recommended that the governing body formally adopt such policies. The current policy capitalizes all items which have a useful life of one year or more and cost in excess of $500. This policy has not been formally adopted by the Board. Based on recommendations from the County's auditors and a survey of Counties of similar financial resources, a change in the capitalization policy is recommended. The policy recommended to the Board capitalizes all assets which exceed one year of useful life AND whose cost exceeds $1,000 in purchase price OR has a serial number. Both the current and the proposed policy track all data processing equipment regardless of cost. As referenced earlier, this change is in some respeds promulgated by comments made by the auditor's during the 1996-97 audit. The auditors recommended that we °Gean up' our fixed asset reporting by increasing our level of value. This recommendation was not considered an audit exception or finding, only a policy consideration. In reviewing our fixed assets the auditor cited many items of immaterial value which could be removed to provide a more efficient means for accountability. In accordance with this, the Purchasing Department has been effeding additions and deletions to the current asset system commensurate to the proposed policy. Staff felt that this revamping of the fixed assets should include formal Board adoption of a fixed asset policy as recommended by the LGC and GFOA. It is proposed that the policy be retroadive to July 1, 1997 in oMer to have the change refleded in the 1997-98 audit. RECOMMENDATION: The Manager recommends that the Board adopt the Fixed Assets Capitalization Policy with an effedive date of July 1, 1997.