(A) The Capital Asset Accounting and Budgeting Policy (CAAP) is established to address the Village of Romeoville's investment in capital assets such as, but not limited to, real property, buildings, machinery, equipment, and infrastructure assets (such as roads, sidewalks, bridges, drainage systems, water systems, water reclamation systems and other similar items). The CAAP is meant to ensure compliance with the village's accounting and budgeting practices, various accounting and financial reporting standards including generally accepted accounting principles (GAAP), Governmental Accounting, Auditing and Financial Reporting (GAAFR), and applicable State and Federal capital asset regulatory and reporting requirements related to property.
(B) Further, the CAAP is meant to reflect the village's desire to meet the reporting requirements set forth in the Governmental Accounting Standards Board (GASB) Statement No. 34 Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments.
(C) Specifically, GASB Statement No. 34 states that governments should provide additional disclosures in their summary of significant accounting policies including the policy for capitalizing assets and for estimating the useful lives of those assets (used to calculate depreciation expense). The statement also requires disclosure of major classes of assets, delineation of assets associated with governmental activities from those associated with business-type activities, beginning and end-of-year balances, capital acquisitions, sales/dispositions and current period depreciation expense by function.
(D) To be considered a capital asset for financial reporting purposes a machinery or equipment item must be at or above a capitalization threshold of $25,000, must have a useful life of 5 years. With regards to the purchase of or improvements to property or buildings, the initial threshold must be in excess of $100,000. The initial capitalization threshold for infrastructure improvements shall be an amount in excess if $150,000. While substantial repairs and renovations below these minimum thresholds will be reviewed and potentially capitalized, it is anticipated that most will be expensed in the current year. All capital assets will be budgeted in accounts separate and easily distinguished from salary, contractual, commodity non-capital asset and reserve expenditures.
(E) The village's Finance Department will ensure that accounting for a capital asset is being exercised by establishing an initial capital asset inventory. The Finance Department will further ensure that the capital asset report will be updated annually to reflect additions, retirements, and transfers and to reflect the new, annual capital asset balance for financial reporting purposes and the annual and accumulated depreciation calculation.
(F) Day-to-day stewardship of personal property (above and in selected instances below the threshold of $5,000) is the expressed responsibility of the operating department utilizing the property.
(G) For maintenance of the capital asset accounting report, the operating departments have the responsibility to report additions, retirements, and transfers in detail to the Finance Department. Detail includes such data elements as asset description, location, make, model, serial number, date of acquisition, cost and such other information deemed relevant. It is expected that this reporting be in a timely manner as the capital asset record must be updated annually.
(H) To be considered a non-capital asset for fixed asset appraisal reporting, budget and inventory purposes a machinery or equipment item must be at or above a $5,000 threshold, below the $25,000 capitalization threshold and must have a useful life of five years. All capital assets will be budgeted in accounts separate and easily distinguished from salary, contractual, commodity, capital asset and reserve expenditures.
(I) Certain sensitive equipment and machinery items below the $5,000 threshold on a unit basis, including, but not limited to, computer equipment, weapons and radios, fax machines, small power tools and other insurable items, may be tracked, inventoried and budgeted as a non-capital asset for safeguarding, insurance and inventory control purposes. These minor but sensitive items, if not included in the fixed asset appraisal reporting, shall be inventoried and controlled at the department level. Data elements are to include asset description, location, make, model serial number and other information that assist control or deemed relevant.
(J) The Finance Department shall determine appropriate means, level of detail, data elements, and system to be utilized. Finally, the right to request copies of the inventory and/or updated inventory of controllable items is reserved to periodically review the information and adherence to policy.
(Ord. 04-0313, passed 10-6-04)