2012-39 Accounting Policies & Procedures Manual Revision • RESOLUTION 2012-39
A RESOLUTION OF THE VILLAGE COUNCIL OF THE VILLAGE OF
NORTH PALM BEACH, FLORIDA, AMENDING THE ACCOUNTING
POLICIES AND PROCEDURES MANUAL FOR INTERNAL CONTROLS TO
REVISE THE SECTION RELATING TO FIXED ASSETS ACCOUNTING
AND RECORDING; PROVIDING FOR CONFLICTS; AND PROVIDING FOR
AN EFFECTIVE DATE.
WHEREAS, Village Administration recommends amending the Accounting Policies and
Procedures Manual for Internal Controls ("Manual") to revise the section relating to Fixed
Assets Accounting and Recording in order to reflect current practices; and
WHEREAS, the Village Council determines that the adoption of the amendments to the Manual
is in the best interests of the residents and citizens of the Village of North Palm Beach.
NOW, THEREFORE, BE IT RESOLVED BY THE VILLAGE COUNCIL OF NORTH PALM
BEACH, FLORIDA as follows:
Section 1. The foregoing recitals are hereby ratified and are incorporated herein.
Section 2. The Village Council hereby revises the Accounting Policies and Procedures
Manual for Internal Controls by revising the Fixed Assets Accounting and Recording section to
delete a column in the Capitalization Threshold table and modify the exception language to allow
department heads to request that the Finance Department track and inventory any time less than
$5,000. Copies of the revisions are attached hereto and incorporated herein by reference.
Section 3. All resolutions or parts of resolutions in conflict herewith are hereby repealed to
the extent of such conflict.
Section 4. This Resolution shall take effect immediately upon adoption.
PASSED AND ADOPTED THIS 14th DAY OF JUNE 2012.
(Village Seal) ,G i -��`.1'
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ATTEST: . .
VILLAGE CLERK
• Fixed Assets Accounting and Recording
The Village follows the capitalization requirements of GASB Statement #34 (Asset Capitalization &
Depreciation Guidance)for its fixed assets.
General Definition
Capital assets include: land, land improvements, buildings, building improvements, construction in
progress,machinery and equipment,vehicles and infrastructure.
Recording and Tagging
Departments will fill out the fixed asset worksheet for all newly acquired assets with the following
information:
a. Description
b. Price
c. Department
d. Location
e. Condition
f. Custodian
g. VIN—Manufacturer—Model—Model Year—License Number
h. Estimated life
i. Vendor,Purchase Order Number,Inventory Number,Inventory Date,Amount
Once information is received a tag number is assigned and information is put into the system. A print out
of the information is run and the tag number is attached to the print out. The print out and tag number are
sent to the Department Head to put the metal asset tag number on the equipment. The copy of the print out
is to be retained by the department until equipment is disposed.
Recording Land
Land is to be capitalized but not depreciated. It is recorded at historical cost and remains at that cost until
disposal. If there is a gain or loss on the sale of land, it is reported as a special item in the statement of
activities.
Recording Land Improvements
Land improvements include items such as excavation and non-infrastructure utility installation; driveways,
sidewalks, parking lots, flagpoles, retaining walls, and fencing, outdoor lighting, and other non-building
improvements intended to make the land ready for its intended purpose.Land improvements can be further
categorized as non-exhaustible and exhaustible.
Non-Exhaustible - Expenditures for improvements that do not require maintenance or
replacement, expenditures to bring land into condition to commence erection of structures,
expenditures for improvements not identified with structures, and expenditures for land
improvements that do not deteriorate with use or passage of time are additions to the cost of land
and are generally not exhaustible and therefore not depreciable.
Exhaustible - Other improvements that are part of a site, such as parking lots, landscaping and
fencing, are usually exhaustible and are therefore depreciable. Depreciation of site improvements
is necessary if the improvement is exhaustible.
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• Recording Buildings
Buildings should be recorded at either their acquisition cost or construction cost. The cost of new
construction should be carefully evaluated.Usually projects consist of major components such as land,land
improvements, building construction (including professional fees and permits), furniture, fixtures and
equipment. In addition, buildings include components(e.g., roof, air conditioner system, etc.) that should
be recorded separately when significant because these building components have different useful lives.The
value of each component needs to be determined and placed within its own category.
Recording Building Improvements
Building improvements that extend the useful life should be capitalized. Examples of building
improvements include roofing projects, major energy conservation projects, or remodeling and replacing
major building components.Only those projects that meet the capitalization threshold need to be included.
Recording Construction in Progress
Construction in progress should be capitalized and not depreciated. It should be reported with land and
other non-depreciating assets at the government-wide level. Unspent debt proceeds from capital assets
related debt should be reported in the net assets section of the statement of net assets as "restricted for
capital projects."
Recording Machinery and Equipment
Assets such as furniture, machinery and equipment (that meet threshold levels) should be identified and
inventoried. Some assets,individually,may fall below the capitalization threshold but may be purchased in
large quantities by the Village. Examples include library books, textbooks and computers. The Village
should aggregate such assets and consider the materiality and significance of them and if material or
significant capitalize such items either individually or in the aggregate.
Recording Vehicles
Vehicles should be identified,inventoried,and if applicable depreciated.
Recording Infrastructure
Infrastructure assets are long-lived capital assets that normally can be preserved for a significant greater
number of years than most capital assets and that are normally stationary in nature. Examples include
roads, bridges, tunnels, drainage systems, water systems, and dams. Infrastructure assets do not include
buildings,drives,parking lots or any other examples given above that are incidental to property or access to
the property.
Capitalization Threshold
Capital assets and infrastructure are capitalized and depreciated as outlined in the capitalization threshold
table below:
Capitalization Threshold Table:
•,..:.:_.:-..:.a.: Ca•italize and De.reciate
Land $4- Capitalize only
Land improvements $4- $25,000
Building $.l- $50,000
Building Improvements $4- $50,000
Construction in Progress $l- Capitalize only
Machinery&Equipment $1000 $5,000
Vehicle $1,000 $5,000
Infrastructure $50;900 $250,000
Deletions
• To delete equipment or an asset from asset records the asset worksheet should be filled out for retire date,
disposal code,and sell price.
• Physical Inventory
Physical inventory of all fixed assets must be taken annually.
Each department will be responsible for taking an annual physical count of their department's inventory per
the list provided by the Finance Department. Department Head shall certify the complete physical count,
additions,deletions and changes marked on the list,and reconciliation of all discrepancies.
The Department of Finance will be responsible for keeping up to date listings of all fixed assets.
Exception
Department Heads may request the Finance Department to track and inventory any item less than$4-5,000.
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