gasb and asset management presentation

GASB andGASB andASSET MANAGEMENTASSET MANAGEMENT

at the at the Oregon Department of TransportationOregon Department of Transportation

How They Relate

By Laura Wipper and Jesse MooreJune 2008

STAYING AHEAD OF THE CURVE...

ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Topics We’ll CoverTopics We’ll Cover

Financial issues – who cares? GASB – compliance & accountability Early implementation of GASB at ODOT Assets – definition & categories Asset Management & GASB

How they relateThings we’re working onBenefitsSuggestions for the future


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Financial Issues – Who Cares?Financial Issues – Who Cares?

When it comes to accounting, reporting, measuring, it’sGASB

One of two boards under umbrella of FAFFASB is the other

Major input provided by AGA & GFOA

When it comes to financing and bonding, it’sSEC IRS


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

What is GASB?What is GASB?

Government Accounting Standards Board Charged with establishing and

improving financial accounting and reporting by state, county, city and other local governments


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Do We Have to Comply?Do We Have to Comply?

Federally mandatedFederal Circular A-133 (Audits of States, Local Governments and Non Profit

Organizations) issued pursuant to the Federal Single Audit Act of 1984

Required by ORS 291.040:State financial report. (1) Within 180 days of the close of each fiscal year, the

Oregon Department of Administrative Services shall prepare a financial report for the State of Oregon. The report shall contain financial statements which fairly present the financial condition and results of operation of the State of Oregon in accordance with current, generally accepted accounting principles and such other financial and statistical information as may be necessary to completely and accurately disclose the financial condition and financial operations of the state and its various agencies.

(2) As used in subsection (1) of this section, “generally accepted accounting principles” means those accounting principles sanctioned by recognized authoritative bodies such as the Governmental Accounting Standards Board, the American Institute of Certified Public Accountants or their successors. [1977 c.897 §1; 1989 c.152 §1; 1991 c.220 §6]


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

How is This Accomplished?How is This Accomplished?

ODOT:Follows

Generally Accepted Accounting Principles (GAAP) GASB pronouncements

Statements that become standards Federal and state requirements

Assists DAS with preparation of the Comprehensive Annual Financial Report (CAFR)

DAS issues state government CAFR annuallyFed by ODOT’s own AFR

Issued for bonding purposes


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

How are Gov’ts Held Accountable?How are Gov’ts Held Accountable?

AuditsFederalSecretary of State, Audits Division Internal External

Holding others accountable

Requirements met equals “clean opinions” ODOT’s report reviewed annually


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

GASB 34GASB 34

Statement that became standard in 1999Sweeping changes in financial reporting

requirements for state and local governments Significant restructuring Most dramatic change since 1930’s

Staged implementation Beginning in 2001


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Goals of GASB 34Goals of GASB 34

Expand government financial reporting requirementsContinue Fund Reporting - short-term

perspectiveAdd Financial Statements - long-term

perspective Includes all assets, liabilities, revenues, expenses,

gains and losses Comprehensive demonstration of stewardship


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

DefinitionsDefinitions

What is an Asset? Anything with

Expected useful life of one year or moreOriginal cost of $5000 or greater (OAM

15.60.10 PO section .103)

Costs for components as a system


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Two Approved Approaches to Report Two Approved Approaches to Report Infrastructure Assets:Infrastructure Assets:

Modified Challenging method used

by many DOT’s requires: Full catalogue of inventory Condition levels Defined inspection

schedules Maintenance costs tracked

to individual assets Comparisons between

actual and estimated costs for past 5 years

Depreciation ODOT’s present

method requires: Asset values Asset age Depreciation

methodology


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Issues for ODOT & GASB 34 at Issues for ODOT & GASB 34 at ImplementationImplementation

Data “hurdle” to meet requirement to report on value of infrastructure assets Inventory, values and depreciation methodology

Absence of procedures and methods for asset management system


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Solutions to Meet Implementation Solutions to Meet Implementation TimelineTimeline Financial Services staff created version of

asset management systemsProcedures and processes to account for

assets Definitions Values Depreciation methodologies Processes to account for new assets and works in

progressMust be “capitalized” when complete


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Financial Categories of AssetsFinancial Categories of Assets

Fixed Assets (AKA non-linear) such as:Right of wayEquipment Information technologyFacilities

Infrastructure Assets (AKA linear)Bridges and TunnelsHighway

Intangibles - pending requirement


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Current and Emerging IssuesCurrent and Emerging Issues

Driven by compliance requirements: Narrowing tolerance has resulted in findings

Current efforts to correct issues have managed to keep these at a reduced level of significance

Increasing expectations and decreasing tolerances - more challenging in the future, i.e.,

472 structures – values or else Works in process Things built with maintenance dollars

Others driven by business needs and accountability


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Some Reasons for Audit FindingsSome Reasons for Audit Findings

Definitions not consistentAsset categoriesWork type

I.e., Construction, preservation, maintenance

Depreciating too fastNot getting all or accurate costs

Works in progress is only part of the issue

Rate not matching useful life


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

What’s the Hammer?What’s the Hammer?

Repeat significant audit findings meanIncreasing oversight by

Audits Division Feds FHWA

Potential impacts to bond rating Mortgage crisis makes this more and more of

a reality


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Asset Management & GASBAsset Management & GASB

Asset Management efforts can provide means to comply with requirements

GASB standards can provide structure for asset data

Effectively blended – sets the stage for much improved financial informationEnabled by ERP/integrated system


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Working on the IssuesWorking on the Issues

Improving communicationODOT Financial Reporting staff, Asset Mgmt staff,

asset owners, etc. Understanding and solving issues

Improving asset data InventoryUpdates


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Asset Asset List:List:

(Draft To Date)(Draft To Date)


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Features Features Attributes & Attributes & Conditions Conditions SurveySurvey

(FACS):(FACS):(Draft To Date)(Draft To Date)


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Other Things to be Aware ofOther Things to be Aware of

Asset Management efforts also positions the agency to revisit financial reporting approach (Depreciation or Modified)Changing to the Modified approach requires

well established and integrated sources of data across assets (still years away)

Accountabilities in Modified approach may be difficult to sustain

Requires condition levels, targets and investments to keep them there


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Suggestions for the FutureSuggestions for the Future Continued communication! Work together on definitions

Assets first, activities later Continue to work on shared solutions

Data that can be integrated (now or later) Revise asset list for shared purpose “Right size” asset data and management

programs Position to support and relate

Ease of efforts later


ASSETMANAGEMENT

ODOT


ASSETMANAGEMENT

ODOT

Questions?Questions?

gasb and asset management presentation

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