Transcript Slide 1
Tangible Capital Assets So Much To Do, So Little Time! LGAA Annual Conference Red Deer, Alberta March 13, 2008 AMAH Project Goals Provide tools and training Raise awareness Mitigate the cost 2 Session Overview What is required Legislative impact Implementation update Challenges 3 Definition angible – can be touched apital – lasts over time sset – has measurable value 4 Major Asset Classifications Land Land improvements Buildings Engineered structures Machinery & equipment Vehicles Cultural & historical 5 Global View Canada & Provinces 2000-2003 USA 2006 Canadian Municipalities 2009 Australia 1998 New Zealand 1990 6 Why? 7 Outside Contributions Provincial grants Federal grants Developers Constructed assets funded from third parties require replacement 8 Meeting the Standard CICA - PSAB 3150 9 Timeline Asset Management 2009 Reporting & Presentation Valuation & Amortization Step 4 Inventory Listing Step 3 Resource Identification and Acquisition Step 2 Planning and Policy Development Step 1 10 Capital Asset Policy 1. 2. 3. 4. 5. 6. 7. 8. 9. Purpose & Scope Asset Definitions & Classification Asset Recording & Valuation Amortization Methods and Rates Review & Write-downs Maintaining Records Asset Disposal Systems Reporting & Budgeting 11 Toolkit www.MEnet.ab.ca 12 Valuation Approaches Actual Cost Estimated Cost •Reproduction (discounted) •Replacement (discounted) •Appraisal (discounted) •Residual •Nominal 13 Valuation Tools Linear •Roads •Drainage •Water & Wastewater Bridges 14 PS 3150 TCA’s on Balance Sheet will be: At cost, less amortization and write downs Amortization and write-downs will be a charge against annual income 15 Impact of Recording TCA’s Brings a non-cash dimension to financial reporting and budgeting Full Accrual Accounting This change does not require a change in behavior, but it may cause you to change because there will be more information available 16 Legislative Impact Municipalities will not be required to fund amortization 17 PS 3150 Requirements All TCA to be recorded in 2009 Amortized over useful life Annual amortization expensed; could result in deficiencies PS 3150 does not mandate funding amortization 18 Future Changes to Financial Reporting – PS 1200 Operating, capital and reserve fund statements replaced with one statement 19 Future Changes to Financial Reporting – PS 1200 Statement of Financial Position ‘Accumulated Surplus’ is one amount; includes ‘Equity in ‘TCA Focus on net financial assets/net debt; not annual results 20 Future Changes to Financial Reporting – PS 1200 Statement of Operations Annual budget will replace operating and capital budgets Capital purchases, debt proceeds and debt principal retirements excluded 21 Summary Resources • Considerable work is required to implement this change • Resources and expertise will be required •Involve auditors, engineers and facility management personnel early on! Benefits • Awareness of problem and magnitude • Better internal information for decision makers • Significant step towards good asset management Next Steps • Replacement cost reassessment • Status of reserve fund levels • Asset Management 22 Questions? 23